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1OANDO PLC 2010 Annual Report

2010 Annual Report

The Energy to Inspire

2OANDO PLC2010 Annual Report

Oando PLC is the largest integratedenergy solutions group in sub-SaharanAfrica with a primary and secondarylisting on the Nigerian Stock Exchangeand JSE Limited respectively.


To be the premier companydriven by excellence

Vision

To be the leading integratedenergy solutions provider

Mission


Operational

Highlight

600 +Service Stations

Marketing Division

Invested $1 million tooptimise lubricantproduction to 100 millionlitres per annum

Oando Marketing PLC is Nigeria’sleading oil marketing retailer withover 600 retail service stations inNigeria, Togo and Ghana and over600 industrial customers cuttingacross the different geographicalzones in Nigeria.

The company markets a wide rangeof petroleum products includingPremium Motor Spirit(PMS),Automotive Gas Oil (AGO alsoknown as diesel), Dual PurposeKerosene (DPK), Aviation TurbineKerosene (ATK), Low Pour Fuel Oil(LPFO), Lubricating Oils, Greases,Insecticides, Bitumen, and Gas(LPG, also known as Cooking gas).

Oando Marketing also has tailormade value adding solutions

meeting the needs of our numerouscustomers including:

Oando Value Added Peddling: Aunique Service which guaranteeseffective supply of Diesel (AGO) andLubricants to companies withmultiple operational sites across thecountry.

Oando Vendor ManagedInventory: A special customerservice initiative which ensuresregular fuels and lubricant suppliesin the premises of the customer.

Oando Pay-As-U-Gas: Aninnovative solution which involveson-the-spot dispensing of LPG usinga pump meter into customerscylinder.

Oando


Supply & TradingDivisionOando Supply & Trading is involvedin large-scale export and import ofpetroleum products and is a leadingsupplier of petroleum products toNigeria, with imports accounting for18% of cars on Nigerian roads.

The company procures and tradesa broad range of refined petroleum

Operational

Highlights

Oando

products and crude oil throughoutAfrica, Europe, Asia and the UnitedStates of America.

These products include Jet A1,Liquified Petroleum Gas, Gasoline,Dual Purpose Kerosene, Diesel,Low/High Pour Fuel Oil, Naphtha,Base Oil and Bitumen.

Recouped all outstandingpayments due from theFederal Government.

Played a pivotal role in thecreation and implementationof the Sovereign Debt NoteInstrument.

18%of the Nation’s fuel requirement

Supplier of


Gas & PowerDivision

Commissioned 12.15MWIndependent Power Plant(Akute Power)

Construction works onEHGC reached advancedstages

100kmPipeline Network in Lagos

128kmPipeline Network in the South East

Oando Gas & Power Division is thedeveloper of Nigeria’s foremostnatural gas distribution network andcaptive power solutions. Thecompany pioneered the distributionof natural gas to commercial andindustrial end-users via pipelines inNigeria, which today serves morethan one hundred industries,operating in the country’s economicnerve centre.

It continues to seek otherfranchises in other parts of thecountry in its quest to build sub-Saharan Africa’s largest naturalgas pipeline network, that willcontribute to the growth of Nigerianeconomy by increasing the globalcompetiveness of local industries,through the provision of a clean,cheap, reliable, and safe energysource.

Operational

Highlights

Oando

Gaslink customerconnects exceeded 100


Energy ServicesDivisionOando Energy Services (OES) isan indigenous Energy servicescompany that utilises industry bestpractices and innovative technologyin delivering safe andenvironmentally sound well siteoperations and high-quality supportto E&P companies operating in theNiger Delta. The company’sservices are aimed at; increasingoilfield efficiency, loweringoperating and production costs,

5Swamp Drilling Rigs

improving productivity andincreasing asset value in a safeand environmentally sound manner.

OES’s Oilfield Services solutionsinclude:· Total Fluids Management

(Drilling & Completion Fluids)· Drill Bits and Engineering

Services; (Roller Cone andFixed Cutter)

· Drilling Rig Services

Operational

Highlight

Oando

Our Second Rig(Teamwork) commenceddrilling operations withAgip.

Operator of


Exploration &Production Division

Oando

Oando holds interests in 13licenses for the exploration,development and production of oiland gas assets located onshore,swamp, and offshore, our primarytask is to harness optimally thepotentials of our existing portfolio:Oando has prolific 2P reserves and2C resources from a portfolio ofProducing, Near term andExploration assets within Niger-Delta, Nigeria/Sao-Tome JDZ andDRSTP EEZ

It has a 15% and 45% Workinginterest in OML 125 and OML 56respectively which are currentlyproducing assets . The companyis also a Nigerian Content Partnerwith AGIP Oil on OPL 282 and hasa 45% interest in a marginal field,OML 56. These fields are in different

13Oil and Gas Assets

Operational

Highlight

stages of development and willsignificantly increase Nigeria's oiland gas reserves.

Our mission is to deliversustainable value to stakeholdersby continually growing reservesthrough the exploration,development and acquisition of Oiland Gas resources. Our growthhas continued unabated throughoutthe global financial crisis due tothe successful management andproduction of oil and gas reserves.Positioned as an owner andoperator of an oil and gas assetpor tfolio the company willcontinue to pursue fur therinvestments in selected African Oiland gas producing basins thatmeet its strategic and financialcriteria and position it for growthcriteria.

Constructed an 8 Kilometerpipeline for the evacuationof crude oil from Obodeti/Obodugwa Field (OML 56)


Contents

Notice of Annual General Meeting 11

Financial Highlights 13

Chairman’s Report 14

Group Chief Executive’s Report 18

Report of the Directors 44

Report of the Audit Committee 58

Financial Statements 59


Maj. Gen. M. Magoro (Rtd), PSC,OFR (Chairman, Non-Executive Director)Mr. J.A.Tinubu (Group Chief Executive)Mr. O. Boyo (Deputy Group Chief Executive)Mr. M. Osunsanya (Group Executive Director)Mr. O. Adeyemo (Group Executive Director, Finance)Mr. A. Akinrele, SAN (Non-executive Director - Retired 7, May 2010)Mr. O. Akpata (Non-executive Director - Appointed 11, November 2010)Chief S. Anthony (Non-executive Director - Appointed 31, January 2010)Ms. N. Appiah-Korang (Non-executive Director - Appointed 11, November 2010)Mr. N. Burney (Non-executive Director - Resigned 17, September 2010)HRM. Oba A. Gbadebo, CFR (Non-executiveDirector)Mr. O. Ibru (Non-executive Director - Resigned 30, April 2010)Alhaji H. Mahmud (Non-executive Director - Retired 7, May 2010)Mr. O.P. Okoloko (Non-executive Director - Resigned 11, November 2010)Ms. A. I. Pepple, CFR (Non-executive Director - Appointed 31, January 2010)Ms. G. Sangudi (Non-executive Director - Resigned 11, November 2010)

Professional Advisers:Oredeji K. Delano (Mrs.) Chief Compliance Officer & Company Secretary

Mr. Olufemi Adeyemo Chief Financial Officer

Mrs. Ronke Sokefun Chief Legal Officer

Registered Office: 2, Ajose-Adeogun Street, Victoria Island, Lagos.

Auditors: PricewaterhouseCoopers, 252E, Muri Okunola Street, Victoria Island, Lagos.

The Registrars & TransferOffices: First Registrars Nigeria Limited, Plot 2, Abebe Village Road, Iganmu, Lagos.

Computershare Investor Services (Proprietary) Limited, 70, Marshall Street,Johannesburg, 2001, PO Box 61051, Marshalltown, 2107, South Africa.

BANKSAccess Bank PlcBank PHB PlcBNP ParibasCitibank, UKCitibank Nigeria LimitedConsolidated Discount House LimitedEcobank Nigeria PlcFidelity Bank PlcFirst Bank of Nigeria PlcFirst City Monument Bank PlcGuaranty Trust Bank PlcOceanic Bank International PlcStanbic IBTC Bank PlcStandard Chartered Bank Nigeria LimitedStandard Chartered Bank Plc, UKSterling Bank PlcUnited Bank for Africa PlcZenith Bank Plc

Directors and Professional Advisers


NOTICE IS HEREBY GIVEN that the 34th (Thirty-Fourth) AnnualGeneral Meeting of Oando PLC (the “Company”) will be held at theLandmark Village Events Centre, Water Corporation Road, Off LigaliAyorinde Street, Victoria Island, Lagos, Lagos State on Thursday,the 30th day of June, 2011 at 10:00 a.m. for the purposes of:

1. Transacting the following ordinary business:1.1 To present the annual financial statements of the Company

and of the Group for the year ended 31st December,2010 and Reports of Directors and Auditors thereon;

1.2 To receive the Report of the Audit Committee;

1.3 To declare the final dividend of N3.00 per sharerecommended by the directors of the Company;

1.4 To elect members of the Audit Committee;

1.5 To re-appoint the Auditors;

1.6 To authorise the directors of the Company to fix theremuneration of the Auditors;

1.7 To elect the following Directors, who were appointed tothe Board of Directors of the Company with effect fromNovember 11, 2010 as directors. In accordance withArticle 88 of the Articles of Association of the Company(“the articles”), their terms expire but being eligible offerthemselves for election.

• Mr. Oghogho Akpata• Ms. Nana Afoah Appiah-Korang

(Please refer to page 41 of the annual report, of whichthis notice forms part, for a brief curriculum vitae of eachdirector).

1.8 To re-elect the following directors who in accordancewith Articles 91 and 93 of the Company’s Articles ofAssociation, retire by rotation, but are eligible and offerthemselves for re-election:

• Mr. Olufemi Adeyemo• Chief Sena Anthony• HRM Oba Michael A. Gbadebo, CFR, the Alake of

Egbaland• Ms. Amal Inyingiala Pepple, CFR

(Please refer to page 41 of the annual report of which thisnotice forms part for a brief curriculum vitae of eachdirector).

2 Transacting the following special business:(i) To consider, and if approved, to pass with or without

modification, the following ordinary resolution to fix theremuneration of the non-executive directors:

Notice of AnnualGeneral Meeting

Oredeji K. Delano (Mrs.)Chief Compliance Officer & Company Secretary


“It is hereby resolved that the fees payable to the non-executive directors of the Company remainsN2,500,000.00 per annum for the Chairman andN2,000,000.00 each per annum for all other non-executivedirectors with effect from 1st January 2011, payablequarterly in arrears.

(ii) To consider, and if approved, to pass with or withoutmodification, the following ordinary resolution:“That on the recommendation of the Directors and inaccordance with Article 141 of the Articles of Associationof the Company a sum of N226,271,157 out of the balancestanding to the credit of General Reserve as at the yearended 31st December 2010 be capitalised and that theDirectors be and are hereby authorized to appropriatethe said capitalised sum of N226,271,157 to the membersholding the shares of the company at the close ofbusiness on 29, April 2011 in the proportion of 1 ordinaryshare of 50kobo for every 4 ordinary Shares of 50k eachheld by them on that day on condition that the newcapitalised sum of N226,271,157 be not paid in cash tomembers holding Ordinary Shares but applied on theirbehalf in paying up in full at par 452,542,314 shares of50k each now issued to be allotted, distributed andcredited as fully paid up to the said members in theproportions aforesaid.”

(iii) To consider and if approved, to pass with or withoutmodification, the following special resolution:

“That on the recommendation of the Directors andPursuant to Article 7 of the Company’s Articles ofAssociation, the Shareholders hereby authorise theDirectors to:

(A) issue up to 25% of the unissued capital of the Company(the “Shares”) by way of a private placement or anyother method on terms and conditions determined by thedirectors for the purposes of corporate restructuring,Mergers & Acquisitions, settlement of debts, employeesand executive compensation and any other purposewhich the directors resolve to be in the best interest ofthe Company subject to obtaining the approvals ofrelevant regulatory authorities.

(B) enter into any agreements and or execute any otherdocuments necessary for and incidental to effectingresolution (A) above.

(C) appoint such professional and other parties and performall such other acts and do all such other things as may benecessary for and/or incidental to effecting the aboveresolutions”.

Voting and ProxiesOn a show of hands, every member present in person or by proxyshall have one vote, and on a poll, every member shall have one

vote for each share of which he is the holder.A member of the Company entitled to attend and vote at the AnnualGeneral Meeting (the “Meeting”) is entitled to appoint a proxy toattend, speak and vote instead of that member. A proxy need notbe a member of the Company.

Registered holders of certif icated Shares and holders ofdematerialised shares in their own name who are unable to attendthe Meeting and who wish to be represented at the Meeting, mustcomplete and return the form of proxy (attached to the annualreport) in accordance with the instructions contained therein ( soas to be received by the share registrars, First Registrars NigeriaLimited at Plot 2, Abebe Village Road, Iganmu, Lagos, orComputershare Investor Services (Proprietary) Limited, 70,Marshall Street, Johannesburg, 2001, South Africa, PO Box 61051,Marshalltown, 2107, not less than 48 hours before the time of theMeeting.

Holders of the Company’s shares in South Africa (whethercertificated or dematerialised) through a nominee should timeouslymake the necessary arrangements with that nominee or, ifapplicable, Central Securities Depository Participant (“CSDP”) orbroker to enable them to attend and vote at the Meeting or to enabletheir votes in respect of their shares to be cast at the Meeting bythat nominee or a proxy.

Dividend PaymentIf the dividend recommended is approved and declared, dividendsdue to shareholders whose names appear in the Company’sRegisters of Members (Nigeria and South Africa) kept in Nigeria asat the close of business on 29th of April will, on the 31st of August2011, either be electronically transferred to shareholders’ bankaccounts or, in the absence of suitable mandates have dividendcheques posted to them, or will have their accounts, at their CSDPor broker credited.

Closure of Registers of MembersThe Registers of Members and Transfer Books of the Company(Nigerian and South African) will be closed between the 3rd May2011 and 6th May 2011 (both days inclusive) in terms of theprovisions of Section 89 of the Companies and Allied Matters ActCap. C20 Laws of the Federation 2004 (the “Companies Act”).

Nomination for the Audit CommitteeIn accordance with Section 359 (5) of the Companies Act, anymember may nominate a shareholder as a member of the AuditCommittee, by giving notice in writing of such nomination to theCompany Secretary at least 21 days before the Meeting.

Dated this 19th day of April 2011By the Order of the Board

Oredeji K. Delano (Mrs.)Chief Compliance Officer & Company SecretaryRegistered Office2, Ajose-Adeogun StreetVictoria Island, Lagos


FinancialHighlights

2010: 378,925,430

2009: 336,859,678

Turnover (N’000)

2010: 24,318,845

2009: 13,512,155

Profit on ordinary Activities before taxation (N’000)

2010: 14,374,966

2009: 10,096,979

Profit After Tax (N’000)

2010: 14,379,066

2009: 10,243,168

Attributable to Group (N’000)

2010: 8.29

2009: 11.32

Basic earnings per 50k share (Naira)

2010: 3.00

2009: 3.00

Dividend per 50k share- proposed (Naira)

2010: 52.58

2009: 58.35

Net Assets per 50k share

2010: 2.76

2009: 1.72

Dividend cover


Highly Esteemed Shareholders,

It is with great delight that I welcome you all to the 34th AnnualGeneral Meeting of your company.

The year 2010 was a year of global economic recovery followingthe downturn that began in 2007. Driven by expansions in oil andgas, agriculture, wholesale and retail trade, and the telecoms sector,the Nigerian economy grew by 7.8% in 2010, thereby making itamongst the fastest-growing economies globally. We have everyreason to be proud of the Company’s achievements in what hasbeen a year of recovery in the global economy. Our strategy to laymore focus on the higher margin upstream sector has yieldeddividends as the sector has contributed considerably to earnings.

Global EconomyThe global economy expanded by 4.5% in 2010, confirming thebeginning of recovery. Major developed nations recovered fromtheir negative GDP growth rates - United States (+2.7%), Russia(+3.8%), Japan (+3%), and European Union (+1.8%) - while theemerging economies maintained impressive growth rates, withChina (+10.3%), India (+8.3%) and Indonesia (+6%) leading theway.

The world economy expanded at a rate of 5.45% during the firsthalf of the year, mostly attributable to robust growth in Asia. Globalindicators of economic activity improved through April and stabilisedat a high level in May. Consumer confidence continued to improve,while industrial production and trade posted double-digit growthand employment growth resumed in advanced economies.Generally, macroeconomic developments during the second quarterof the year confirmed expectations of a modest but steady recoveryin most advanced economies and continued strong growth in manyemerging and developing economies. The second half of the year,however, saw a slowdown in growth as turbulence in financialmarkets – reflecting a drop in confidence about future growthprospects and fiscal sustainability – cast a shadow over the outlook.

Gross Domestic Product (GDP) in Sub-Saharan Africa wasestimated by the World Bank to have expanded by 4.7 percent in2010, up from 1.7 percent in 2009. Foreign direct investment toSub-Saharan Africa declined by 12.3 percent in 2009. However,this recovered by 6 percent to $32bn in 2010. Indeed, foreign directinvestment to the region has risen in six of the past eight years,reflecting increased investment interest in the region (UNCTADestimates that the rate of return of FDI in Africa is the highestglobally). Forty per cent of this investment belonged to Nigeria,Angola and South Africa.

The global economy is poised for stronger growth in 2011 as recentimprovements in US economic activity and continued strong growthin major emerging economies point to a continued global recovery.

NigeriaPolitically, Nigeria suffered the loss of its president, Umaru MusaYar’Adua in May of 2010 after a his illness. The resilience of ourdemocracy was tested by the illness of the president, however the

Chairman’sReport

Major General M. Magoro (Rtd.) PSC, OFR, USAWC

Galadiman ZuruChairman

We have every reason to be proudof the company’s achievements inwhat has been a year of recoveryin the global economy”

“


smooth transition of power to the then Vice President, JonathanGoodluck, underscores the strengthening of our democraticprocess.

The country experienced a GDP growth rate of 7.9% in 2010,outperforming other African OPEC members. Oil prices averaged$80/barrel with production reaching 2.45million bpd by the end ofthe year, translating to an increase in revenue.

The introduction of the sovereign debt note program by the FederalGovernment early in the year now protects private sector importersfrom delayed payments of Petroleum Support Funds (PSF); thishas strongly improved the operating environment for downstreamoperators. However, the deregulation of the sector is still yet tomaterialise. The Petroleum Industry Bill is also widely expected tobe passed by the second quarter of 2011. This bill is expected toincrease Nigeria’s share of production and profits from its naturalresource base. In order to protect capital investments in the sector,the government has commenced a huge budgetary developmentprogramme for the Niger Delta and granted amnesty to the region’smilitants. The country is expected to attract $50bn in foreigninvestment over the next five years and therefore reach theOrganisation of the Petroleum Exporting Countries (OPEC) estimateof a production level of 2.9mn bpd by 2015.

The non-oil sector, which has experienced robust expansion inrecent years, continued to be the main driver of overall growth thisyear. Inflation followed a downward trajectory as it fell from 14.9%in January to 12.8% in November 2010. The Central Bank is followinga contractionary policy stance with the aim of pruning the expectedhikes in inflation in 2011.

Following the banking sector reform in 2009, the sector has shownsigns of a slow but steady recovery in 2010. Key indicators ofperformance and stability are slowly improving, largely due toattempts by the CBN to keep all rescued banks alive and preventdeterioration of healthy banks. Significantly, the Asset ManagementCorporation of Nigeria (AMCON) completed the first phase ofpurchasing N1 trillion worth of non-performing loans from banks;this is expected to impact positively on their ability to lend. However,credit remains expensive, with the maximum lending rate remainingabove 20%. Credit to the private sector grew by just 2% in Q3 2010(quarter on quarter). This is expected to increase as the governmentpursues expansionary fiscal policy and maintains a relatively lowmonetary policy rate of around 6.5%-7.0% over the next few years.

Nigeria is expected to continue its strong growth performance in2011, with GDP expanding to 7.1% before moderating in 2012 to6.2% closer to its medium term trend growth rate. The oil sectorshould be a major driver of growth, benefitting from new offshoredevelopments and an improved security situation in the Niger Deltaarea. The scaling-up of government spending on infrastructure willalso reinforce growth prospects.

Our Values

• Teamwork

• Respect

• Integrity

• Passion

• Professionalism


2011 Economic OutlookWith our focus and strategy remaining clear, we are in a primeposition to surpass our past performance to the ultimate satisfactionof our esteemed shareholders. Economic commentators expectsteady growth for various emerging market economies in 2011.Erosion in the standard of living due to rising food and commodityprices, is expected to feature prominently in emerging marketcountries for 2011.

The upcoming general election in April 2011 in Nigeria is expectedto hamper the implementation of the 2011 budget as legislativeattention might be diverted during the period. However, uponsuccessful completion of the elections, a revision of the budget islikely because the projected 3.62% budget deficit seems farfetchedwhen compared to the 6% of GDP in 2010. Inflation is expected toremain in the double digit territory due to rising food prices aroundthe world. The Nigerian Naira is expected to remain stable and theintroduction of foreign exchange derivatives by the CBN will helpbusinesses manage their currency risk better whilst easing pressureon the spot in the currency market.

The need for an improved profitability performance (measured byROE) will stimulate banking system credit growth into the doubledigits territory. The balance sheet recovery amongst the banksespecially those with lighter non performing loans burden followingAMCON’s purchase of eligible toxic assets is a further sign of animprovement in the banking sector.

According to the Economist Intelligence Unit (EIU), Nigerianeconomic expansion will be buoyed by the expected robustperformance in the non-oil sector. Additionally, real GDP growth isexpected to exceed 6.5% for 2011.

The ascent of oil prices from current levels is highly anticipated, aspeculative commodity bubble is believed to be forming currently.This will enable oil producers and traders deliver above averageresults in 2011.

Your Company remains well positioned for immense growth in 2011as we await the passing into law by the FGN of key reforms suchas the Petroleum Industry Bill that will promote indigenous firms inthe upstream, in the midstream the actualization of the Power SectorRoad Map will enable us increase our footprint in the sector as itpresents opportunities to participate in grid generation and electricpower distribution and the full deregulation of white products in thedownstream sector. With our focus and strategy remaining clear,we are in a prime position to surpass our past performance to theultimate satisfaction of our esteemed shareholders.

The BoardIn 2010, Mr. Oboden Ibru, Mr. Navaid Burney, Mr. Onajite Okolokoand Ms. Genevieve Sangudi resigned their appointments due togrowing demands on their time from other interests. They wereactive members of the Board and Board’s subcommittees.

On behalf of the Board, and the Company, I wish to express oursincere gratitude and appreciation for the contributions of Mr. Navaid

With our focus and strategy remaining as clearas ever, we are in a prime position to surpassour past performance to the ultimate satisfactionof our esteemed shareholders.”

“


Burney, Mr. Oboden Ibru, Mr. Onajite Okoloko and Ms. GenevieveSangudi during their tenure. We truly appreciate their commitmentand valuable contributions to the success of Oando and wish themthe very best in their future endeavours.

Furthermore, in accordance with Article 88 of the Company’s Articlesof Association, Ms. Nana Afoah Appiah-Korang and Mr. OghoghoAkpata were appointed as Directors in November 2010. I am pleasedto inform you that the new directors are vastly experienced in theOil & Gas and Finance sectors and are expected to significantlycontribute to the growth and development of Oando.

Oando e-Dividend, e-Report and e-Bonus CampaignTo ensure timely communication and reduce challenges associatedwith your investment, whilst managing the share register welaunched an e-communication initiative where mandate, reportscan be received electronically. We kick-started the initiative bysending out bulk SMS and deploying mass media adverts to drivethe ‘Know Your Shareholders’ segment of the initiative.

I urge you all to leverage on the e-communication channels so thattogether we can reduce unclaimed dividends.

Finally I want to use this opportunity to inform you of my intention toretire as Chairman of the Company at the end of this year as Iwould have attained the age of 70 and will be offering to serve thenation as a senator. I will be contesting in the forth coming elections.

I wish to thank the Board Members, Management and Shareholdersof Oando PLC for your support during my eleven year tenure; itwas indeed a privilege to have served the Company.

I also wish the Board of Directors and our great Company all thebest in future endeavours.

Thank you

Major General M. Magoro (Rtd.)PSC, OFR, USAWCGaladiman Zuru

Chairman


2010 HIGHLIGHTS

Results reflect resilience of our integrated business model ina challenging operating environment

In 2010, the Company witnessed an immense improvement in itsfinancial results in comparison to 2009, thereby confirming a yearof tremendous growth for our company in line with the globaleconomic recovery experienced since the downturn that began in2007. Our strategy to lay more focus on the higher margin upstreamsector yielded dividends, with this sector contributing immensely toour earnings. Our turnover increased by 12% from N336.86bn in2009 to N378.93bn in 2010, and Profit After Tax also increased by42% from N10.10bn in 2009 to N14.37bn in 2010. This underscoresthe resilience of our integrated business model, which leveragesscale, diversity and market leadership to consistently deliver in theface of our challenging operating environment. Our growth wasspurred on by a 128% subscription for our N21bn Rights Issue andthe successful execution of a N60bn, 5 year medium term facility.

Group Chief Executive’sReport

Mr. J. A TinubuGroup Chief Executive


our ambition going forward is toenhance and optimise the intrinsicvalue of the assets in our portfoliousing the most productive capitalstructure whilst releasing moreresources to capitalise onopportunities the ongoing reformsin the industry should present in thenear future.

“

”


210,000 MT capacity210,000 MT capacity210,000 MT capacity210,000 MT capacity210,000 MT capacityterminal, conceptual-terminal, conceptual-terminal, conceptual-terminal, conceptual-terminal, conceptual-ized to be best-in-ized to be best-in-ized to be best-in-ized to be best-in-ized to be best-in-class and the largestclass and the largestclass and the largestclass and the largestclass and the largestproduct terminal inproduct terminal inproduct terminal inproduct terminal inproduct terminal inthe sub-region dis-the sub-region dis-the sub-region dis-the sub-region dis-the sub-region dis-patching over 500patching over 500patching over 500patching over 500patching over 500trucks per day in whattrucks per day in whattrucks per day in whattrucks per day in whattrucks per day in whatis set to revolutioniseis set to revolutioniseis set to revolutioniseis set to revolutioniseis set to revolutionisepetroleum productspetroleum productspetroleum productspetroleum productspetroleum productsdistribution in Nige-distribution in Nige-distribution in Nige-distribution in Nige-distribution in Nige-ria.r ia.r ia.r ia.r ia.

210,000 MTCapacity Terminal


DownstreamThe Group’s operations in the downstream sector compriseits Marketing & Supply & Trading businesses. In addition,the Group has a Refining & Terminaling business divisionwhich currently harbours a number of projects.

N480.4bn

Totalrevenue

Total revenue bybusiness segement

1. Marketing N171.1bn2. Supply and Trading N309.3bn


BUSINESS DIVISIONS REVIEW

DOWNSTREAM

Oando Marketing PLC (OMP)

Oando Marketing PLC (OMP) is a leading retailer of petroleumproducts in Nigeria with over 600 retail outlets and industrialcustomers across all major sectors; we also have operations inGhana, Togo and Liberia. OMP’s business activities cover the salesand distribution of petroleum products such as Premium MotorSpirit (PMS), Automotive Gas Oil (AGO), Dual Purpose Kerosene(DPK), Aviation Turbine Kerosene (ATK), Low Pour Fuel (LPFO),Lubricating Oil and Greases, Bitumen and Liquefied Petroleum Gas(LPG, commonly known as Cooking Gas).

Financial Highlights 2010

· Turnover of N171.1billion· EBITDA of N7.7billion· PAT of N3.9billion

Review of 2010Oando Marketing PLC recorded positive results in 2010 despitethe externalities which adversely affected our business environmentin the year under review. Oando Marketing PLC‘s performancewas built on the foundation of improved operational efficiency,effective monitoring and strong internal controls to mitigate againstthe turbulent business environment the company experiencedduring the year.

The first quarter of the year was dominated by poor implementationof policy on Petroleum Subsidy Fund (PSF), which impactedadversely on PMS supply across the nation. This led to a riskadverse strategy employed in the banking industry, towards grantingproduct importation facilities to marketers, the underutilisation ofour operating lease facilities and resultant increase in operatingcosts within the period.

The introduction of the Sovereign Debt Notes and arrears paymentto suppliers in the industry helped to ease the product availabilitychallenge in the second quarter of the year. The availability of

250

200

150

100

0

Turnover

N171.1bn 2010N156.2bn 2009

4

3

2

1

0

PAT

N3.9bn 2010N2.67bn 2009

2009 2010

2009 2010


products helped to boost Q2 2010 gross margin performance by200bp on Q1 2010 as a result of station optimisation strategy put inplace. However, the continued downtime at our Onne facilityimpacted on AGO Sales and Terminal storage optimization for thefirst 6 months of the year.

The third quarter of the year was characterised by the reintroductionof credit sales as liquidity crises experienced in the first two quartersof the year eased off. The quarter also experienced product glut inthe market thereby necessitating an aggressive pricing strategyfor our Total White Product (TWP) ranges with a focus being onmarket share protection and acquisition.

The focus in the last quarter of the year centred around marketshare improvement while recovering lost margins in H1, 2010,stringent cost control and working capital management in order tooptimise bottom line performance.

Major Events:On the 4th of August 2010, Oando Marketing Limited wastransformed to Oando Marketing PLC. This change follows thestrategic vision of the group to achieve the following: (i) to ensure awider shareholder base for Oando Marketing (ii) to divest part ofOando PLC’s interest and use the proceeds to finance the highermargin midstream and upstream business (iii) meet the listingrequirements of the Nigerian Stock Exchange.

PRODUCT REVIEW:

PMS volume sold in 2010 was 1.6bn Litres (7% above prior year’s).OMP PMS volume was the highest recorded in the industry by anymajor marketing company despite uncertainties about PSF policythat rocked the industry in Q1 of 2010.

AGO volumes sold during the period was 288m litres (1% higherthan prior year’s).This performance put OMP at number one in the industry despiteintense price competitiveness, down time at our Onne Terminalfacility due to the repair works on the damaged Onne Pipeline andliquidity strategy employed to reduce the size of commercial creditbook.

OMP’s Value Added Peddling (VAP) strategy, the ongoing AGOincentive scheme and our ability to respond to market realitiesunderpinned the strong AGO performance in 2010.

Oando Marketingturnover for theyear ended

N171.1bn

OandoMarketingprofit after tax

N3.9bn


war which drove down margins; further government intervention atthe instance of Airline Operators saw an industry wide pricereduction of about 50%.

Outlook for 2011Oando Marketing PLC‘s expectations for 2011 remain bullish aswe believe that the market will continue to expand. With the largestpresence all over Nigeria, Oando Marketing PLC remains firmlycommitted to take advantage of the economic conditions to deliverconsistent superior returns. Emphasis remains on creating thefoundations for sustainable growth by investments in internalprocesses, asset upgrade and brand management.

Other significant focus initiatives include:· Grow our Vendor Managed Inventory (VMI) business with

long term contracts to ensure product delivery at the pointswhere they are used.

· Focus on cash management and cost saving tactics to ensurelimited exposure, Trade Account Receivables will receivecontinued focus.

· Grow our lubricants business to market dominance amongMOMAN through different initiatives including a lubesdistributorship scheme.

· Investments in retail outlets for 2011 including Oando Plusscheme, Branding of new company-owned stations for marginincrease and Upgrade of strategic assets.

· Renewed interest in Non-Fuel Revenue as a strategic growtharea through Real Estate & other Retail partnerships.

· Significant attention will go to customer service excellencethrough a comprehensive reward scheme for all customer-facing retail staff.

· Strategic re-organization of the Operations team withemphasis on process framework, fleet and logistics.

Oando Supply and Trading BusinessOando Supply and Trading Limited and Oando Trading Limited(Bermuda) represent the products trading arm of the Oando Group.Our business activities cover trading of refined and unrefined

HHK sales grew by 111% over 2009 figures. Market conditionsremained largely the same as in 2009 as volumes suffered due toregulatory price ceilings which restricted the majors from sellingthe product at a profitable price. The improvements recorded abovewere as a result of sales from the eastern region (70% of the total);most of these sales came within third and fourth quarters as aresult of government receipts from Warri & Port Harcourt refineries.This performance put us at number one among majors.

OTHER PRODUCTS (LUBRICANT AND SPECIALTIES)

Lubricant sales volume suffered a 17% drop from 2009 volumesmainly due to a combination of factors: (i)The acute scarcity ofTWP in Q1 2010 affected forecourt sales (which accounted forabout half of lubricant sales) and; (ii) Strict adherence to creditrequirements for all customers. Market share however remainedsteady at 17% even with stiff competition arising from theimportation of cheap products by Independent Marketers. Thereare ongoing initiatives to grow Oando volumes and market share.A lubes promo was carried out in the third quarter, 2010 as part ofa long term strategy to improve brand awareness and steadyvolumes for the period. New initiatives include the distributorshipscheme, an incentive scheme for sales staff and a renewed targetto increase our industrial customer base.

LPG 2010 sales at 13,000MT tripled 2009 sales; this was as aresult of the expansion of our sourcing channels. Throughput fromfilling plants significantly reduced due to repairs but sales weresteady. OMP is the market leader in this product segment with 58%market share among majors. 2011 volume target is set at 25,000MTand focus will be on improving forecourt sales through the Pay-As-U-Gas initiative, cylinder push and continuous dominance of thebulk LPG market.

ATK Volume sales in 2010 rose by 8% over 2009 but Gross Marginfell by 44% over the same period. This was as a result of severalfactors including rising cost of goods without a corresponding risein prices; new entrants with cheaper material also initiated a price


petroleum products to refiners, marketing and trading companiesworldwide. Oando Supply and Trading is responsible for the supplyof refined petroleum products in Nigeria, whilst Oando Trading isresponsible for supply into other markets. Products traded includegasoline, gas, oils, kerosene, aviation fuel, distillates, naptha, fueloils, bitumen, base oils, liquefied petroleum gas.

The business also maintains a presence in the world’s productsfreight market in terms of vessels chartered on spot and timecharter basis for delivery of oil and oil products to various customersworldwide.

Financial Highlights 2010· Turnover of N309.3billion· EBITDA of N6.0billion· PAT of N4.8billion

Review of 2010The Supply and Trading business was less active in the first quarterof 2010 especially with PMS, its major product. The decision toreduce activity was deliberate to ensure that all outstandingsubsidies due from government in 2009 were collected.

Re-invigorated activities resumed in the second quarter of 2010with the successful introduction and implementation of the SovereignDebt Note (SDN) by Petroleum Products Price Regulatory agency(PPPRA). SDN is a government backed guarantee of subsidypayment. By Q4 the company was acknowledged by PPPRA in thenational newspaper as the highest importer of PMS into Nigeriaapart from PPMC.

Exchange rates were stable in 2010, probably due to the lessvolatile crude oil prices and the reforms of the Central Bank ofNigeria for the year. Benchmark interest rates were maintained at6% for most of the year in 2011, borrowing rates were also reducedby 1% in Q1 2010 compared to Q2 2009. Bench mark rates werehowever increased in September by 0.25%. Generally, interestrates were lower for the company compared to 2009 resulting inhigher savings and increased profitability.

Throughout the year, there was stability in the Niger Delta followingthe amnesty deal in 2009. This may have contributed to the stablecrude oil prices.

The relatively stable economic and business environmentcontributed to the impressive performance of the company.

Outlook for 2011In 2011, Oando Supply and Trading look towards the enabling policiesthat are being implemented by the FGN for growth. We will adopt athree-pronged approach to value creation:

1. Increased geographical footprint in Africa;2. Increased product offering; and3. Increased operational efficiencies.


100kmPipeline Network in Lagos

128kmPipeline Network in South East

12.15mwAkute Independent Power Plant


N17.4bn

Totalrevenue

MidstreamOando Gas and Power business is in the distribution ofnatural gas and power initiatives aimed at electricitygeneration and distribution in Nigerian and West Africancountries.


1. Gaslink N15.4bn2. Akute Power N2bn


Gaslink places strong emphasis on the safety and integrity of itspipeline infrastructure. This is underpinned by the rigoroushydrostatic tests on these pipelines according to global best practiceon safety and quality standards. In 2010, we achieved fulldeployment of Distribution Integrity Management Programs (DIMP)and instituted emergency readiness procedures in all our projects.

Year 2010 witnessed a resolution of the natural gas pricing impasse,as the Federal Government of Nigeria initiated a new natural gaspricing framework for domestic utilization. The implementation ofthis regulation is with effect from December 2010. The period 2010-2014 is a price-transitory period for the industrial end users, startingwith $5.66/mscf during 2010-2012.

The Federal Government of Nigeria’s amnesty programmeenhanced security of natural gas supply by the Nigerian GasCompany (NGC). Compared to 23 gas outage days experienced in2009, there was no gas outage in the year 2010.

Akute Power Limited (APL)Akute Power Limited (APL) and Lagos State Water Corporation(LSWC) entered into a power purchase agreement in 2008 for12.15MW electricity supply to LSWC main Water Works. The projectis the first in the series of captive power projects earmarked forexecution over the next few years. APL ties in with our strategy ofbecoming a core investor in the Nigerian Electricity Industry and aplayer under a Public Private Partnership scheme. The outlook forthe company is attractive with the guaranteed cash flow expectedfrom the plant operations.

In the year under review, the construction of the power plant wascompleted and commercial operation commenced in March 2010.We have obtained all necessary regulatory approvals includingpower generation license from the Nigerian Electricity RegulatoryCommission (NERC).

East Horizon Gas Company Limited (EHGC)EHGC was established as a Special Purpose Vehicle (SPV) toconstruct 18" x 128km natural gas pipeline from the existing Obigbo-ALSCON line in Ukanafun and supply natural gas to the UnitedCement Company of Nigeria Limited at its Mfamosing plant in Cross-River state.

MIDSTREAM DIVISIONOando Gas & Power LimitedOando Gas and Power (OG&P)’s business is in the distribution ofnatural gas and power initiatives aimed at electricity generation anddistribution in Nigerian and West African countries. Our strategicfocus is to aggressively create Nigeria’s domestic gas grid andleverage the infrastructure to be the prominent local gas and powerprovider. Oando’s gas and power division will continue to deliver onits mandate as one of the major drivers of growth in the OandoGroup.

Oando Gas & Power (OG&P) is responsible for development,operation and management of Oando Plc’s gas and powerbusinesses which currently include Gaslink Nigeria Limited (GNL),Akute Power Limited (APL), East Horizon Gas Company Limited(EHGC), and other prospective gas and power Special PurposeVehicles (SPVs).

In 2010, OG&P completed the development of its captive powerplant, Akute Power Limited, and continued to focus on expandingits Greater Lagos Franchise. Also, OG&P secured new IndependentPower Plant (IPP) mandates in Lagos State and an award for thedevelopment of natural gas distribution infrastructure in Rivers Stateunder a Build Own & Operate model.

Oando Gas & Power has retained its Quality Management SystemCertification and has also been adjudged by Standards Organisationof Nigeria (SON) as compliant with ISO 9001:2008 standard. InOG&P, we are resolute in our commitment to safe practices andcontinue to provide the required safety for people and theenvironment.


REVIEW OF 2010

Gaslink Nigeria LimitedGaslink Nigeria Limited (GNL) is the flag-ship Company and mainoperating arm of Oando Gas & Power Limited.


The Federal Government and the Nigerian National PetroleumCorporation (NNPC) had earlier given their approval to the NGC toenter into a Build-Operate-Transfer (BOT) arrangement with EHGCfor the project. With the initial approval in place, EHGC then obtaineda commitment from NNPC for the supply of 22 million standardcubic feet per day (mmscf/day) of natural gas being the requiredvolume for the first phase of the project.

The project has reached overall progress of 85%, having achievedmajor milestones that included Survey Verification, Bush Clearing,Laying & Welding, Major River Crossing, and Horizontal DirectionalDrilling (HDD). Mechanical completion of the main line is expectedto be achieved by Q3 2011.

West African OperationsIn a bid to take advantage of the growing business opportunitiesthat the soon to be commissioned West African Gas Pipeline(WAGP) will provide, we have incorporated subsidiaries in someWest African countries: Republic of Benin, Ghana and Togo. This isto leverage our experiences in gas distribution/power generationand provide energy solutions to industries in those countries, onthe back of the WAGP.

Our strategy is to partner with local companies and the nationalutility companies in these markets and be the dominant player inthe West African gas and power markets. Numerous delays in thefinal take off of the WAGP project have meant that we have had todelay the start-up of all our projects in these markets. In the interim,we have spent time creating relationships with potential partners inthese countries.

Outlook for 2011Oando Gas & Power will continue to grow its business portfolio andestablish itself as a force to be reckoned with in the gas and powerspace in Nigeria and in the West African region. In 2011, OG&P’srevenue target is premised on the following:

• Translation of three ongoing projects into operating businesses:• East Horizon Gas Company (Calabar region in Cross

River State)• Central Horizon Gas Company (Port Harcourt region in

Rivers State)• Gas Network Services (Compressed Natural Gas Project

in Lagos State)

• Expansion of customers’ offtake from the Gaslink natural gassupply.

We also expect the year 2011 to mark an inflexion point in ourhistory as a division, as we lay the foundation for significant growthand expansion in the coming years. This would be driven by thecommencement of execution of additional captive power plantsthat will become operational as from the first half of 2012, potentialsuccess of our participation in the major gas and power prospects.i.e Power Holding Company of Nigeria divestment process and theNigerian Gas Master Plan. In conclusion, 2011 offers enormouschallenges and opportunities for OG&P to implement its vision of

We intend to become thedominant player in West AfricanGas and Power markets, bypartnering with local companiesand the national utilitycompanies”

“


Constructed an 8 Kilometer pipelinefor the evacuation of crude oil fromObodeti/ Obodugwa Field.

OML 56

Commenced drilling contractOES Teamwork


TurnoverN35.0bn

Totalrevenue

UpstreamOando holds interests in 13 licenses for the exploration,development and production of oil and gas assets locatedonshore, swamp, and offshore, our primary task is toharness optimally the potentials of our existing portfolio:


1. Energy Services N15.5bn2. Exploration and Production N19.5bn


REVIEW OF 2010

Swamp Drilling RigsThe main focus in Q1 2010 was ensuring that a second rig, OESTeamwork, a 10,000HP, 2000psi rig purchased in 2008 commencedoperation. Following an extensive maintenance programme, therig mobilised to the NAOC/NNPC JV first well location andcommenced operations on 26 March 2010 for a 2 year contractwith a 1 year rollover option and a day rate of US$98,000. Byapplying many of the lessons learned from the challenges facedduring the startup of OES Integrity our 1st rig with NAOC/NNPC JVwith a day rate of US$104,000, we were able to minimise the non-productive time at startup. As at 31 December, 2010 the utilisationrate of OES Teamwork was a remarkable 98.5%.

The OES Integrity continued to deliver critical wells in accordancewith the client’s 2010 drilling programme. Following a series of wellcompletion activities that contributed to an increase in oil productionlevels for the client, on 23 August, the client exercised its rightunder the contract to assign the rig to a JV partner. The assignmentof the contract, which occurred under the same terms andconditions of the underlying contract will subsist for a minimum of6-months and is likely to see the OES Integrity drill its first HighPressure, High Temperature well for the client, the SPDC/NNPCJV, before the rig is handed back to NAOC in 2011.

With both the OES Integrity and OES Teamwork in full operatingmode, in 2010, OES officially became the dominant drilling rigcontractor in the Niger Delta swamps.

More success was to come in the latter part of the year when,following a rigorous tendering exercise, OES Passion, the cantileverswamp rig acquired in April 2009 was successfully awarded acontract with the SPDC/NNPC JV with a day rate of US$99,000,pending the approval of the main contract by the National PetroleumInvestment Management Services (NAPIMS), for a 2-year contractwhich has an estimated value of US$70million. Scheduledrefurbishment of the rig costing approximately US$20million hasalready commenced. In a demonstration of our support for thegovernment’s initiative to develop local capacity in the industry,OES committed to undertaking the refurbishment of the rig in Nigeria,at the Brawal Jetty in the Onne Free Trade Zone. With theinternationally recognised refurbishment experts CPD Oilwell atthe helm of the project and Aberdeen Drilling Consultants providingthe necessary QA/QC, this project is set to become a model for in-country capacity building.

The task of placing OES Respect on contract started in earnest in2010 with OES bidding to win a 2 year contract with an IOC. Withthe tender process for the award of this contract likely to concludein 2011, it is expected that 4 OES rigs will be on long term contractsbeyond 2012.

being the leading and most innovative energy group in our chosenmarkets.UPSTREAM DIVISION

Oando Energy Services DivisionThe year proved to be an opportunity for OESL to solidify its positionas a leading drilling services provider to the oil and gas industry.The sustained amnesty experienced in the Niger Delta in addition tothe steady rise in oil prices led to an increase in confidence foroperators in the oil sector, thus having a corresponding positiveeffect on drilling activity in the region.

Financial Highlights 2010• Turnover of N15.5billion• EBITDA of N4.9billion• Loss after tax N543million


Drill BitsIt was a challenging year for the Drill Bits business. The setbacksbeing faced by some of our clients, such as the delayed startup ofthe Total Jackup rig; Seawolf Onome, the assignment of the Sedco702 to Tullow in Ghana and the delay in concluding the ongoingMobil Contract resulted in a decline in the bits supplied to keycustomers during the year. This in turn resulted in a drop in revenuefor the business in comparison to 2009.

While there were difficult times, the year was successful in manyways, particularly in the award of two contracts which have anestimated value of US$11.9m to OES. These two year contractsawarded by Mobil Producing Nigeria Unlimited and Total UpstreamPetroleum Nigeria Limited in addition to the re-establishment of ourrelationship with Chevron Joint Venture and Pan Ocean willguarantee a better sales performance in 2011.

Drilling FluidsFollowing the giant strides made in 2009, the business continued toprovide value added services to its clients. The company’scustomer-focused approach paid dividends during the year, as ourcommitment to our client’s projects was rewarded time and againwith the extension of contracts that were set to terminate in 2010.

To emphasise our commitment to service quality, OES invested inthe acquisition of a state-of-the-art mud laboratory in May 2010.This acquisition ensures that quality checks that were beingoutsourced are now being carried out in-house, thus enabling OEShave better control of its costs while providing much needed qualityassurance to our customers.

The business witnessed a drop in revenue in 2010, primarily due tothe assignment of one of the change to Shell Nigeria Explorationand Production Company (SNEPCO) rigs, the Sedco 702 to Tullowin Ghana in addition to the fact that the Chevron Joint Venture rigthat operated for some part of 2009 was not replaced in 2010 asoriginally expected. Unfortunately, this resulted in OES being unableto operate the Chevron Joint Venture contract for the full year.

To make up for the shortfall, we made attempts to generate incomefrom alternative revenue streams such as the provision of solidscontrol services. The year ended with the provision of this serviceto one of our clients. The successful outcome of this venture hasled to plans being made to offer the services to more clients in2011. As a result of our venture into solids control services, theinstallation of new equipment and our focus on service quality,training was considered a major focus area for the fluids businessin 2010 and 100% compliance to the required training was achievedfor all technical and non-technical positions.

Outlook for 2011With the range of services being offered by OES graduallyincreasing, the company has positioned itself to offer turnkeyservices to operators. Plans are in place to form an alliance with anintegrated project management company that will focus on bundlingall of OES’ service offerings along with other third party services inorder to offer independent oil companies and indigenous players aone-stop shop for their drilling campaigns.


Oando Exploration and Production DivisionThe year 2010 witnessed the global tail to the recession and atempered rebound for global economies on average around theworld. In line with this recovery, there was an overall rebound incommodity prices and by proxy crude oil to slightly higher pricelevels (2004 – 2005) defined by the Asian growth and a weakerdollar and, a risk focused increase to credit line. This rebound alsosignaled an increase in capital expenditure programs and forecastfor exploration and production business activities globally, albeitthis rebound was not without what some may call nature’s calls totemper man’s appetite for energy resources as exemplified by theBP castrophe. However, this global trend was not isolated to thelocal economy and to Oando Exploration and Production Limited.This year we are pleased to announce that we achieved a zeropercent causality level in a capital intensive industry such as ours,an increase in the average daily production to 4,500bopd throughits upstream vehicles listed below, refinancing of its bank facilitieswhich should improve our working capital position, improvement inour evacuation efficiency by completing Obodeti/Oboduguwaevacuation pipeline.

Given these achievements as an indigenous player, our ambitiongoing forward is to enhance and optimise the intrinsic value of theassets in our portfolio using the most productive capital structurewhilst releasing more resources to capitalise on opportunities theongoing reforms in the industry should present in the near future.


REVIEW OF 2010

OML 125 and OML134Oando OML 125 and OML134 Limited acquired a 15% participatoryinterest in OML’s 125 and 134 in 2008. These blocks are operatedby Nigeria Agip Energy (“NAE”) and are located in Nigeria’s deepoffshore segment with acreage size of 1,220 Km2 (OML 125) and1,187 Km2 (OML 134) respectively.

Production from the Abo field within OML 125 averaged 30,000 bpdin the last quarter of 2010. Production came in above forecastaverage production for the year. Anticipated natural productiondecline was abated by a successful stimulation campaign, whichhelped maintain production at the previous year levels. Abo North-2-Deep-DIR wildcat well was drilled in Q4. Preliminary resultssuggest non-commercial hydrocarbon presence leading to the wellbeing plugged. 4D seismic acquisition was completed for the AboCentral field grouping and will influence the program for furtherdevelopment of OML 125. The company was able to lift 1,048,564barrels of crude oil (net to Oando) through the pooling agreementthat was signed.

In OML 134, 2,108 Km2 of 3D seismic data was successfullyacquired in the second quarter of the year. This data will be used indetermining the next steps in the OML 134 exploration program.The tendering process for the seismic processing is currentlyunderway. Seismic processing and interpretation of the asset datawill commence as soon as a competent seismic processingcontractor has been identified. Preliminary reports currently suggestcontingent resources (2C) in the region of 14.4mmbbl (RPS 2010).

Obodeti/Obodugwa Field Area (OML 56)OPDC acquired a 45% working interest in the Obodeti/Obodugwafield area from the government during the marginal field allocationround in 2003. This acquisition was made pursuant to a marginalfield Farm Out Agreement between NNPC, Elf Petroleum, Energiaand Unipetrol Production and Development Company Limited.Further to the unitization agreement between the Group, Energiaand Pillar Oil in April 2004, the combined working interest of theGroup and Energia in the oil production from the Obodugwa 3 well,which is located in an adjacent concession operated by Pillar Oil, is30%. Four wells had been drilled in the Obodeti/Obodugwa fieldarea by Elf (now Total).

Following production tests in October 2009, the Obodeti/Obodugwafield commenced oil production operations in December 2009.


Evacuation of the crude was initially done through a trucking system.However, an 8km pipeline has since been completed and wascommissioned in August 2010 with a Lease Automated CustodyTransfer (“LACT”) unit installed at the facility. Production from thisfield is expected to average over 3,500bpd in 2011 upon completionof our drilling program for this year.

Akepo Field (OML 90)Oando Akepo entered into a Farm In Agreement with Exile, followingwhich the Group acquired a 30% working interest in a MarginalFields Farm Out Agreement with respect to the Akepo field. Underthe JOA between the field’s original concession owners, Sogenaland Exile. Sogenal is currently the operator of the field whilst Oandoand Exile entered into a Financing, Technical and ManagementServices agreement (“FTMSA”) in 2008 which provided for Oandoto assume the responsibilities of Exile as Technical Partner torecover costs expended in that respect from Exile under allocationsof proceeds received from the Field. The Akepo field is located inshallow water in the Niger Delta, on an area of 25.7 Km2 within OML90.

Akepo is currently in the development phase with estimated 2Preserves of 2.1mmbbl. 2010 initiated the review and modification inthe processing and evacuation route to market Akepo crude, whichshould significantly improve project economics of the marginalfield. Production is anticipated to commence in Q4 2011.

OPL 236OEPL was awarded this block in May 2007 and the ProductionSharing Contract was signed with NNPC in February, 2008. Thisconferred OEPL with a 95% working interest and operatorship ofthe block. RFO Ventures is the local content vehicle (LCV) with a5% participatory interest. The block is located onshore Akwa-IbomState with a total acreage of 1,650 Km2. A Global Memorandum ofUnderstanding (GMOU) was signed with the Ukana community inAugust 2008.

OPL 236 is currently in the exploration stage with estimated 2Creserves of 33.6bcf (RPS report). In 2010, 2D seismic data forOPL 236 was purchased and digitized. Regional interpretation ofthe seismic data began at the end of Q3, which resulted in adelineated footprint for targeted acquisition of 3D seismic data onthe block.

2011 will see the kickoff of a development program aimed atharnessing the gas reserves in line with the proposed industry gasmaster plan and delivering the much needed clean energy for thegrowing utilities and power industry within the region.

Oando holds interests in 13licenses for the exploration,development and production of oiland gas assets located onshore,swamp, and offshore, our primarytask is to harness optimally thepotentials of our existing portfolio.”

“


OPL 278In January 2006, OEPL acquired a 60% working interest pursuantto a PSC among the Group, CAMAC, Allied Energy and First Axisand the NNPC, in respect of OPL 278. OPL 278 is operated byOEPL under a JOA made between OEPL, CAMAC, Allied Energyand First Axis. OPL 278 is located offshore of Rivers State in atransition zone (swamp to shallow marine) on an area of 91.9Km2.Three prospects have been identified in OPL 278, which are Ke,Prospect A and Prospect B. The block is currently in the explorationphase.

OPL 282On 8 August 2006, OEPL acquired a 4% working interest in thePSC between NAOC, Alliance Oil Producing Nigeria Limited andNNPC, in respect of OPL 282 (the “OPL 282 PSC”). NAOC holds a90% working interest in the OPL 282 PSC, while AOPN, whichrepresents the local content vehicle in OPL 282, holds the remaining10% working interest. The Group holds 40% of the shares in AOPN,while ARC Oil and Gas Nigeria Limited holds the remaining 60%.OPL 282 is operated by NAOC under a JOA made between NAOCand AOPN. OPL 282 is located in a transition zone (onshore toshallow marine) in Bayelsa State, on an area of 695 Km2. This blockis currently in the exploration and appraisal phase.

Outlook for 2011Despite the challenges experienced in 2010, we see a healthiergrowth outlook and are very optimistic about 2011 especially asthe industry expects to be repositioned by the much anticipatedpassage of the Petroleum Industry Bill (PIB) by the National Assembly.Both bills are expected to increase our footprint, as an indigenousintegrated oil and gas company, in the industry, as it would presentmore opportunities for us to acquire more acreage from the

International Oil Companies (IOC’s) and farm-into under-performingassets that have near-term production profiles. Furthermore, weshall continue to position ourselves as the preferred partner ofchoice to companies seeking to gain entry into the Nigerian oilindustry and the Gulf of Guinea. Our focus is to increase currentdaily production to 10,000bpd/daily, apply the optimum capitalstructure to development and acquisition opportunities goingforward, maintain our zero percent health and safety score cardand, grow our reserves accordingly to deliver increased value toour stakeholders both locally and internationally.

PROJECTS

Oando Refinery and Terminals DivisionOR&T, your downstream asset development organisation, hascontinued its journey towards becoming a major cash engine forthe Group by addressing the nation’s supply shortcomings in twodistinctive phases, short/midterm and long term; the scope includesmainstream products like PMS and products still in the growthphase such as LPG.

The first phase of the Apapa Submarine Pipeline (ASP) project, ajetty in the Lagos harbour that connects to the major marketers’storage by a half kilometre subsea pipeline and a new 3km onshoreline delivering almost 3 million tonnes a year has been approved bythe DPR and NPA and will come on-stream late 2012.

Your company’s marketing company has grown LPG volumes by200% and with full regulatory approval, is well placed to commencethe construction of its own storage solution to support the greatwork it is doing in developing the sales channels. A facility, smaller


than earlier envisaged, will come on-stream late 2013, developedby this division.

In the midterm, we continue to work with the Lagos State Governmentto develop the second Phase of the Lekki Free Trade Zone and theopportunities for a state of the art refined product storage facilitytargeted at relieving Lagos of the burden of processing the majoritythe nation’s fuel imports.

Even as the group’s focus is to deliver the promise of superiorshareholder returns through astute investments in upstream oiland gas field appraisal and production, we maintain refining optionsas part of a Group of investors invited by the NNPC to developrefining capacity. The long term solution will be a multi-billion dollardevelopment of the first Greenfield refinery development in Africafor over twenty years. The first phase of a proposed 360,000 bpdrefinery will satisfy at least half of the nation’s import requirementand enhance shareholder value with strong distillates exports tomeet severe deficits in the Atlantic Basin.

In summary, the division has matured two major infrastructureprojects to construction phase and our increased investment incapabilities and process enhancement ensure reliable world classdelivery, creating a platform to sequentially secure newopportunities as they arise out of new insight and without doubt, thegovernment’s privatisation drive.


Environmental Health Safety Security and Quality/ SCAThis report presents an overview of Environmental Health SafetySecurity and Quality (EHSSQ) key achievements in line with theCompany strategic vision for 2010.

In line with Oando’s determination to continue providing petroleumproducts and services as a world class company, Oando MarketingPLC (OMP) and Oando Gas & Power Limited (OGP) upgradedtheir ISO 9001 certification status to the latest, 9001-2008 edition,while two other subsidiaries, Oando Supply & Trading Limited (OST)and Oando Exploration & Production Limited (OEPL) have alsobeen awarded the latest ISO 9001:2008 certification by theStandards Organization of Nigeria (SON). Through these QualityManagement Systems, Oando has demonstrated its ability to deliversuperior quality products and services while ensuring customersatisfaction. Staff awareness and capability on EHSSQ/SCA wasfurther enhanced through the rigorous and specific EHSSQ/SCAtrainings necessary to guarantee the safety of people & assets, aswell as prevent pollution of the environment in which Oandocompanies operate.

The EHSSQ department supported key projects such as obtainingprovisional EIA (Environmental Impact Assessment) approval forthe Akepo Field (OML 90). The department also established &implemented Security plans for Rig operations while assessmentof critical assets was completed for Oando Exploration & ProductionLimited and Oando Energy Services. Full compliance of Akute PowerPlant to standard requirements of operational safety in a processinvolving a detailed Hazardous Area Classification (HAC),procurement & installation of a robust alarm/fire protection systemand training of operational staff was also achieved.

Amongst all, most of our key achievements are listed below:• Award of ISO 9001:2008 Certification to Oando Marketing

PLC, Oando Exploration & Production Limited, Oando Supply& Trading Limited and Oando Gas & Power

• EHS –MS Audits, Management facility Inspections and followup audits

• Trained staff/contractors: Trainings such as StressManagement, BOSEIT, First Aid, Survival Swimming, AdvanceFire Fighting for Fire Marshals, ISO 14001 EnvironmentalManagement System, OHSAS 18001, OHSA 1910.PSM,NEBOSH IGC, EHS Level 1, 2 & 3 trainings and EHSAccountability & Compliance Culture were conducted.

• Won, for the second year running, the Lagos State Ako- EkoEnvironmental Summit on Green Environmental AssessmentAward for 2010.

The Key to Success – Our PeopleWe understand that to a large extent, the ability of our Company tobe successful depends greatly on our people assets. We area Company positioned for the future, and accordingly focus ondeveloping, motivating, rewarding and retaining individuals with therequired knowledge and competencies that will propel us into thisgreat future. The year 2010 was therefore seen as a period offurther consolidation regarding the Human Capital Initiatives overthe last three years.

Talent Management and People DevelopmentThe first phase of the Oando Corporate University (OCU) projectrollout was achieved with the launch of electronic learning coursesin partnership with SkillSoft, a world renowned provider of e-learningcontent.The process of designing and developing the business curriculumfor the Oando Corporate University (OCU) commenced in line withour objective to entrench learning and development that is businessfocused and is “Oando centric”.

Graduate Trainee ProgrammeThe Oando Graduate Trainee (GT) Programme continues to attractthe very best of young minds from across various technical andnon-technical disciplines. A total of 16 (sixteen) trainees wereadmitted into the programme in 2010 after an extensive and thoroughselection process following very stringent criteria to ensure thatonly the best candidates are enrolled on the programme. Successfultrainees from the 2009 batch have now been fully integrated intothe Company as full term employees. With the successfulimplementation of the GT programme, we have made significantprogress in growing talent and creating a pipeline of technically andmorally competent individuals. These employees, who would bethe champions of the culture and core values of the organisation,cater for emerging human resource requirements of the Companynow and in the future will continue to be equipped with the relevantskills as we provide necessary tools and resources to help themdevelop in their careers.


The Oando Mentoring ProgrammeThe Oando Mentoring programme has been revamped andrestructured to offer a formal and structured setting in whichbeneficial one-to-one relationships between employees and selectedmentors are developed. Acting as friends, teachers and guides,mentors are required to encourage and advise their mentees bysharing their own experiences, information and knowledge thatcan help mentees meet their professional and personal developmentgoals. The mentoring programme also seeks to help employeesimbibe the Oando core values as defined under TRIPP, create asense of belonging and foster loyalty to the brand and ultimatelyimprove retention of employees across the Group.

Remuneration, Benefits and Employee WelfareDuring the course of the year, several remuneration and salarysurveys were carried out to confirm our competitiveness within ourmarket and in line with our corporate reward strategy. The Companyalso continued to maintain her reputation as an employer of choiceas salary reviews were implemented with employees receiving apay rise to help cushion the effects of inflation in the economy. In abid to ensure that pay within each of the Company’s businessentities remains competitive within the industry where the businessexists, the pay structures of the business entities were revampedand re-aligned for better efficiency in salary/pay administration.

Recruitment, Selection and Attrition ManagementIn line with our objective to attract and retain the best talents in allthe functional areas within the Group especially in our growthbusinesses in the upstream and mid-stream sector, we held twomajor career fairs in 2010. These events, specifically organised toattract talent into our upstream businesses held in the UnitedKingdom and the United States and afforded us the opportunity ofbringing on board, highly experienced professionals who havedistinguished themselves in their various fields of expertise workingwith world class organisations. In 2010, a total of 116 full termemployees were employed into the organisation. 23 employeeswho joined the Company were brought in to fill various positionsacross the Group in the Management Staff Cadre and 93 in theNon-Management Staff cadre. With an overall normal attrition rateof 6% in 2010, the Company continues to attract and retain requiredtalent to effectively man its operations to achieve set objectives.

Leadership Development and Succession PlanningThe Oando People Council (OPEC) was strengthened as a forumto focus on talent management initiatives. There is now a heightenedemphasis on the accelerated development pool and successionplanning framework to ensure that talent is not only identified andnurtured but the process of differentiation is achieved.

The Oando FoundationOando commenced the process of establishing a Foundation in2010, which will function as a vehicle for Corporate SocialResponsibility (CSR) initiatives. Our focus as Oando will be toinfuse our core ideologies (TRIPP) into this company, our countryand our continent as a useful tool for social change.

The Oando Foundation will be a standalone organisation focusingits efforts on our CSR drive towards education and fosteringsustainable development to improve the quality of life of the peoplein our communities amongst other initiatives.

ConclusionWe stand positioned to maximise the opportunities presented bythe rapidly evolving legal framework of the upstream sector inNigeria and will divest up to 49% of our marketing business topartially finance our investment drive in producing assets, whilstramping up production in our existing portfolio. We look forward tothe deployment of 2 additional swamp rigs into operations and inthe midstream division, the commissioning of our 128km SouthEastern pipeline and the commencement of the Greater LagosPhase 4 pipeline development.

As we roll out our pipeline of initiatives, 2011 and beyond, promisesto be exciting years of growth for the organisation and substantialvalue creation for our shareholders.

Mr. J. A TinubuGroup Chief Executive


Board of Directors

Major General Mohammed Magoro (Rtd.) OFR. He is theChairman of the Board and a Non Executive Director of theCompany. Major General Magoro (Rtd) was appointed to theBoard on 17 July 2000 and has held the position of Chairmansince 2000. From 1984 to 1985, Major General Magoro (Rtd)served as the Federal Commissioner for Transport and from1987 to 1991 as the Minister of Internal Affairs. In addition, heserved on the board of the National Maritime Authority from1987 to 1991. Major General Magoro (Rtd) is a retired generalof the Nigerian Army. He currently sits on the board of FidelityPension Managers Limited as well as the Board of Trustees ofthe Peoples Democratic Party.

Mr. Omamofe Boyo is the Deputy Group Chief Executiveof the Company, having been appointed to this position in2006. Prior to his appointment, Mr. Boyo was ExecutiveDirector, Marketing, of the Company from 2000 to 2002and the Deputy Managing Director/Chief Operating Officerfrom 2002 to 2006. Mr. Boyo serves on the boards of severalcompanies in the Group, including Gaslink, OandoExploration and Production Limited, Oando Marketing PLCand Oando Supply & Trading. Mr. Boyo is currently adirector of OOH, OOIM, OOIN, OOHN, Indumines Ltd,Midwestern Quantum Voice Systems Ltd, I2I Nigeria Ltdand Lagos Prepatory School Ltd. Prior to his appointmentas Executive Director of the Company in 1999, Mr. Boyowas an Executive Director of Ocean and Oil ServicesLimited from 1994 to 1999. Mr. Boyo started his careerwith Chief Rotimi Williams’ Chambers, a Nigerian lawfirm, where he specialised in shipping and oil services andworked on several joint venture transactions between theNigerian National Petroleum Corporation and majorinternational oil companies. Mr. Boyo obtained a Bachelorof Laws degree from Kings College, University of London,in 1989.

Mr. Olufemi Adeyemo was appointed as Group ExecutiveDirector on 30 July 2009 and as the Chief Financial Officer of theCompany in October 2005. Mr. Adeyemo is also an IndependentDirector of Easy Fuel Limited. Prior to joining the Company,Mr. Adeyemo was a Management Consultant at McKinsey & Co.from 1998 to 2005 and has extensive experience in strategicconsulting, especially in the areas of mergers and acquisitions,operations reviews, strategy development and implementationas well as organisation redesign and financial management.Before joining McKinsey & Co., Mr. Adeyemo was the FinancialController and Head of Operations from 1994 to 1997 at FirstSecurities Discount House Limited, a leading investment housein Nigeria. Mr. Adeyemo worked as an auditor with PwC from1988 to 1992. He has been a member of the Institute of CharteredAccountants of Nigeria for 13 years. He obtained a Master ofScience degree in Finance from the London Business School,UK, in 1998, a Master of Science degree in MechanicalEngineering from the University of Lagos, Nigeria, in 1988 and aBachelor of Science in Mechanical Engineering from theUniversity of Ibadan, Nigeria, in 1987.

Mr. Mobolaji Olatunbosun Osunsanya was appointedas an Executive Director of the Company on 27 June 2007.Mr. Osunsanya has been the Chief Executive Officer ofOando Gas and Power Limited since 10 September 2007and Gaslink Nigeria Limited since January 2004. Prior tohis appointment as the Chief Executive Officer of GaslinkNigeria, he was the Chief Marketing Officer – Commercialof Oando Marketing PLC. Prior to joining the Company inAugust 2001, Mr. Osunsanya was an executive director atAccess Bank Plc from November 1998 to March 2001 andan Assistant General Manager at Guaranty Trust Bank Plcfrom 1992 to 1998. From 1988 to 1992, Mr. Osunsanyaworked as a consultant with Arthur Andersen, Nigeria (nowKPMG professional services) gaining experience in thebanking, oil and gas and manufacturing industries.Mr. Osunsanya obtained a Bachelors degree in Economicsfrom the University of Ife, Nigeria, in 1985 and a Mastersdegree in Economics from the University of Lagos, Nigeria,in 1987.

Mr. Tinubu is the Group Chief Executive of Oando PLC, aposition he assumed in January 2005 after the consolidation ofall Oando’s affiliate and subsidiary companies into an integratedenergy group known as the Oando Group. Prior to this, Walewas made MD/ CEO of Oando PLC in July 2001 after servingas the Executive Director, Finance and Administration of thecompany.

Since beginning his tenure in 2001, Wale has successfullysteered Oando from its traditional business of petroleummarketing to the status of an energy group, by addinginternational supply & trading, gas, energy services andupstream oil to its stable of offerings. Today, Oando PLC isAfrica’s leading energy solutions provider with six companiesacross the entire energy value chain who are leaders in theirrespective markets, providing employment to thousands ofemployees directly and indirectly.

In 2007, he was named a ‘Global Young Leader’ by the WorldEconomic Forum, Geneva, Switzerland, in recognition of hisachievements as one of the leading executives, public figures,and intellectuals under 41 years of age. In 2010, Mr. Tinubuwas awarded ‘Africa’s Business Leader of the Year’ by theAfrica Business Magazine and the Commonwealth BusinessCouncil on the basis of his contributions to the development ofthe African Oil and Gas industry.

Mr. Tinubu currently serves on the boards of several of theGroup’s subsidiaries, including Gaslink Nigeria Limited,Oando Supply & Trading, Oando Energy Services Limited andOando Exploration and Production Limited. He also serves onthe boards of directors of several other companies, includingOcean & Oil Holdings (OOH), Ocean & Oil Mauritius (OOIM),Ocean and Oil Investments (Nigeria) Limited (OOIN), Oceanand Oil Holdings (Nigeria) Limited (OOHN), Tilca NigeriaLimited, Broll Properties Services Limited (Broll Nigeria),and Trojan Estates Limited. He is a member of the 7th GoverningCouncil for Lagos State University, Institute of Directors ofNigeria and the Nigerian Bar Association.

Mr. Tinubu obtained a Bachelor of Laws degree (LLB) from theUniversity of Liverpool, England in 1988 and a Master of Lawdegree (LLM) from the London School of Economics, UnitedKingdom, in 1989 where he specialised in International Financeand Shipping.


‡ - Independent Non Executive

HRM Michael Adedotun Gbadebo, CFR, The Alake ofEgbaland is the Alake (King) of Egbaland in Nigeria and wasappointed as a Non-Executive Director of the Company on10 April 2006. Prior to his coronation as the Alake of Egbalandin 2005, HRM had a successful career in the Nigerian Armyculminating in his appointment as the Principal Staff Officer tothe Chief of Staff, Supreme Headquarters from January 1984 toSeptember 1985. He was also awarded military honours suchas the Forces Service Star and the Defence Service Medal.HRM Gbadebo obtained a Bachelor of Arts degree from theUniversity of Ibadan, Nigeria, in 1969. He graduated from theStaff College of the Nigerian Armed Forces in 1979 and hasserved on the boards of several companies including Ocean andOil Services Limited. HRM Gbadebo currently serves on theboards of Global Haulage Resources Limited and DolphinTravels Limited.

Chief Sena Anthony ‡ was appointed as an Independent Non-Executive Director of the Company in January 2010. Prior to herappointment, Chief Anthony worked with the Federal Ministry ofJustice before joining the Nigerian National PetroleumCorporation (the “NNPC”) in 1978. She was appointed GroupGeneral Manager, Corporate Secretariat and Legal Division, aswell as the Secretary to the NNPC in July 1999 and was promotedto the level of Group Executive Director on 6 May 2007. ChiefAnthony was the first female to be appointed to such a position inthe NNPC. She retired in January 2009 as the Coordinator (GroupExecutive Director Level) Corporate Secretariat and LegalDivision as well as the Secretary to the Corporation and Board ofthe NNPC after working for the NNPC for 31 continuous years.Chief Anthony was also a director of Napoil Limited, a crude oiland petroleum products trading company owned by the NNPC,a director of Brass LNG Company and General Manager Legaland secretary to the board of Nigerian LNG Limited. Chief Anthonyobtained a Bachelors degree in Law from the University of Lagosin 1973 and was called to the Nigerian Bar in 1974.

Ms. Amal Inyingiala Pepple, CFR ‡ Ms. Pepple wasappointed as an Independent Non-Executive Director of theCompany in January 2010. Prior to her appointment, Ms.Pepple served as a civil servant for the Government for 32years. She has served as Deputy Secretary, ConstituentAssembly Federal Republic of Nigeria, Secretary of theNational Assembly Provisional Office of Abuja, ClerkDesignate of Senate National Assembly, and Clerk of SenateNational Assembly. Ms. Pepple has also served asAdministrative Secretary of the Social Democratic Party,Rivers State and Sole Administrator of the United NigeriaCongress Party. She has also been Director of the FederalCivil Service and Director of the Economic Affairs Office,Presidency. Ms. Pepple has served as Permanent Secretaryin the following Ministries: Federal Civil ServiceCommission, Federal Ministry of Transport, FederalMinistry of Information and National Orientation, FederalMinistry of Petroleum Resources, Federal Ministry ofCommerce, Federal Ministry of Agriculture and WaterResources and Federal Ministry of Finance. On 16 June2008, she was appointed as Head of the Civil Service of theFederation. Prior to joining the Government, Ms. Pepplestarted her career as a Lecturer in Political Science at RiversState College of Education, Port Harcourt Rivers State.Ms. Pepple obtained a Bachelors degree in Political Sciencefrom the University of Ife Ile Ife, Nigeria, in 1975 and a Mastersdegree from the School of Oriental & African Studies,University of London, United Kingdom, in 1981.

Mr. Oghogho Akpata‡ was appointed as an Independent Non-Executive Director of the Company in November, 2010. MrOghogho is also the Managing Partner and Head of the Energyand Projects Group at Templars Barrister & Solicitors. Oghoghopossesses 20 years experience in the transactional disputeresolution aspects of the Nigerian oil and gas sector and advisesa broad range of clients including international oil companies, oilservice contractors and a number of multinationals operating inNigeria. Oghogho has been listed among the leading energy andnatural resources lawyers in Nigeria by Chambers Global guideto the legal profession from 2005 to date.

Mr. Akpata obtained a Bachelors degree in Law from theUniversity of Benin in 1990 and was called to the Nigerian Bar in1991. Mr. Akpata is also a Director of FMC Technologies Limited,BlueWater Offshore Production Systems Limited, Choice FarmsLimited, and was in 2006, the Director of International BarAssociation Section on Energy, Environment, Natural Resourcesand Infrastructure Law Conference.

Ms. Nana Afoah Appiah-KorangMs. Nana Afoah Appiah-Korang was appointed as a Non-Executive Director of the Company on 11 November, 2010. Sheis a Director of Emerging Capital Partners (ECP). With sevenfunds and over $1.8 billion under management, ECP is a leadingprivate equity manager focused exclusively on Africa.Headquartered in Washington DC, ECP has six offices acrossAfrica and a ten-year track record of successful investment incompanies operating in over 40 countries on the continent. Sheis involved in deal sourcing, investment appraisal, executionand value creation. She has also played a key role in implementingexit strategies for ECP’s investments in both Africa Fund I andAfrica Fund II. She currently serves on the board of ContinentalReinsurance Plc, the leading local reinsurer in Nigeria whereshe sits on the establishment and statutory audit subcommittees. Prior to joining, ECP, Ms. Appiah-Korang served as an InvestmentOfficer for ECP Global having joined in 2002.

Before her employment with ECP Global, Ms. Appiah-Korangworked for the Real Estate Principal Investment Group ofGoldman, Sachs & Co. in New York where she executed realestate private equity transactions in the US and played an activerole in the marketing of the Whitehall XII funds to potentialinvestors in the US, Europe and Asia. Ms. Appiah-Koranggraduated from Mount Holyoke College with a Bachelor’s degreein Mathematics and a minor in Economics.


FinancialHighlights

2010: 378,925,430

2009: 336,859,678

Turnover (N’000)

2010: 24,318,845

2009: 13,512,155

Profit on ordinary Activities before taxation (N’000)

2010: 14,374,966

2009: 10,096,979

Profit After Tax (N’000)

2010: 14,379,066

2009: 10,243,168

Attributable to Group (N’000)

2010: 8.29

2009: 11.32

Basic earnings per 50k share (Naira)

2010: 3.00

2009: 3.00

Dividend per 50k share- proposed (Naira)

2010: 52.58

2009: 58.35

Net Assets per 50k share

2010: 2.76

2009: 1.72

Dividend cover


Oando ata Glance

Our groupStructure

Where weoperate

Oando is listed on the JSE Limited in South Africa

Bermuda Benin Republic Nigeria

Ghana Togo

Downstream

Upstream

Midstream


In accordance with the provisions of the Companies and AlliedMatters Act, the Directors of Oando PLC hereby present to themembers of the Company the audited consolidated financialstatements for the year ending 31 December 2010.

The preparation of annual financial statements is the responsibilityof the Directors, and it should give a true and fair view of the stateof affairs of the Company.

The Directors declare that nothing has come to their attention toindicate that the Company will not remain a going concern for atleast twelve months from the date of this report.

Legal FormThe Company commenced operations in 1956 as a petroleum-marketing company in Nigeria under the name ESSO WestAfrica Inc., a subsidiary of Exxon Corporation (“Exxon”), and wasincorporated under Nigerian Law as Esso Standard Nigeria Limited(“Esso”) in 1969. In 1976, the Federal Government acquired Exxon’sinterest in Esso; Esso was nationalised and rebranded as UnipetrolNigeria Limited (“Unipetrol”). A process of privatisation began in1991 when the Federal Government divested 60% of itsshareholding in Unipetrol to the public. Unipetrol’s shares werelisted on the Nigerian Stock Exchange (the “NSE”) in February1992, quoted as Unipetrol Nigeria PLC. Under the second phase ofthe privatisation process, the Federal Government sold its remainingshareholding in Unipetrol. Ocean and Oil Investments (Nigeria)Limited, the Company’s core investor (“OOIN”), in 2000, acquired30% in Unipetrol from the Federal Government. The residual 10%stake held by the Federal Government was sold to the public in2001.

In August 2002, Unipetrol acquired a 60% stake in Agip Nigeria Plc(“Agip”) from Agip Petroli International. The remaining 40% of theshares in Agip were acquired by Unipetrol by way of a share swapunder a scheme of merger. The combined entity that resulted fromthe merger of Unipetrol and Agip was rebranded as Oando PLC inDecember 2003.

On 25 November 2005, the Company was listed on the JSE Limited(the “JSE”) and thereby became the first African company to achievea cross border inward listing.

In June 2007, the Company entered into a scheme of arrangement(the “Scheme”) with certain minority shareholders of Gaslink andwith OOIN. Under the Scheme, the minority shareholders of Gaslinktransferred their equity holdings in Gaslink to the Company inconsideration for ordinary shares in the Company. In addition,OOIN transferred its interests in Oando Supply and Trading Limited,Oando Trading (Bermuda) Limited, Oando Production andDevelopment Company Limited, Oando Energy Services Limitedand Oando Exploration and Production Company Limited to theCompany in consideration for ordinary shares in the Company.

Description of OperationsOando’s business is organised into six business divisions. Thesedivisions are:i. Exploration and Production;ii. Energy Services (in the upstream sector);iii. Gas and Power (in the midstream sector);iv. Marketing;v. Supply and Trading;vi. Refining and Terminaling (in the downstream sector).

Business Review The Company is required by the Companies and Allied Matters Actto set out in this report a fair review of the business of the Groupduring the financial year ended December 31, 2010 and of theposition of the Group at the end of the year and a description of theprinciple risks and uncertainties facing the Group (“businessreview”). The information that fulfils these requirements can befound within the Chairman’s and Chief Executive’s Statement, reviewof operations

DividendThe Directors are pleased to recommend the payment of finaldividend of N 3.00 per ordinary share of fifty kobo each held. Therecommended dividend is subject to the deduction of appropriatewithholding taxes. If the dividend recommended is approved anddeclared, dividends due to shareholders whose names appear inthe Company’s Registers of Members (Nigeria and South Africa)kept in Nigeria as at the close of business on 29th of April 2011 will,on the 31st of August 2011, either be electronically transferred toshareholders’ bank accounts or, in the absence of suitable mandateshave dividend cheques posted to them, or will have their accountsat their CSDP or broker credited.

Any dividend payable on or in respect of an Oando share which isunclaimed may be invested or otherwise made use of by Oando, atthe discretion of the directors, until claimed. Any dividends whichremain unclaimed for a period of 12 years from the date when suchdividends became due for payment shall, if the directors so resolve,be forfeited to the Company. No unpaid dividend shall bear interestagainst the Company.

Oando has maintained an informal dividend policy as a result ofextensive growth in its businesses. As the Company transits fromits aggressive growth phase to a consolidation phase, the directorswill move to adopt a more formal dividend policy which will balancesteady dividend payments with adequate equity retention for futuregrowth. In the interim, the Company has not entered into anyarrangements for which future dividends have been or will bewaived.

DirectorsThe BoardDuring the course of the year, some of the Non-Executive Directorsof Oando PLC resigned from the Board of Directors. Mr. ValentineOboden Ibru resigned his appointment on 30th April 2010. He wasappointed as Director on the 25th of June 2004 and was a memberof the Strategic Planning and Finance Committee and theGovernance and Nominations Committee of the Board.

Report of theDirectors


Mr. Navaid Burney resigned on the 17th day of September 2010. Hewas appointed on the 27th day of May 2008 and was a member ofthe Risk, Environmental Health Safety, Security and QualityCommittee of the Board, Strategic Planning & Finance Committeeand the Chairman of the Governance & Nominations Committee.

On the 11th day of November 2010, Mr. Onajite Okoloko and Ms.Genevieve Sangudi resigned from the Board of Directors. Ms.Sangudi was appointed on the 1st day of January 2010 and was theChairperson of the Environmental Health and Safety Committee aswell as member of the Strategic Planning and Finance Committeewhile Mr. Okoloko was appointed on the 17th day of July 2000 andwas a member of the Strategic Planning and Finance Committee.

An Independent Non-Executive Director, Mr. Oghogho Akpata anda Non-Executive Director, Ms. Nana Afoah Appiah-Korang wereappointed to the Board of Directors effective 11th November 2010pursuant to Article 88 of the Articles of Association of the Company.In accordance with the said Article 88, their terms expire but beingeligible they offer themselves for election at the general meeting.

In accordance with Section 259(1) and (2) of the Companies &Allied Matters Act (CAMA), 2004 and Articles 92 & 93 of theCompany’s Articles of Association, the following Directors, who arelongest in office are retiring by rotation will present themselves forre-election at this meeting:• Mr. Olufemi Adeyemo• Chief Sena Anthony• HRM Oba Michael A. Gbadebo, CFR, the Alake of Egbaland• Ms. Amal Inyingiala Pepple, CFR

The names of Directors who held office during the year and at thedate of this report are as follows:

Non Executive Directors1. Major-General Mohammed Magoro (Rtd.), PSC, OFR,

USAWC, Galadiman Zuru2. Mr. Ademola Akinrele, SAN*3. Chief Sena Anthony4. Mr. Navaid Burney†5. Mr. Oghogho Akpata ‡6. Ms. Nana Afoah Appiah-Korang7. HRM Michael Adedotun Gbadebo, CFRThe Alake of Egbaland8. Mr. Oboden Ibru†9. Alhaji Hamidu Mahmud*10. Mr. Onajite Okoloko†11. Ms. Amal Pepple, CFR ‡12. Ms. Genevieve Sangudi†

· ‡ - Independent Non Executive· * - Retired· † - Resigned

Executive Directors13. Jubril Adewale Tinubu14. Omamofe Boyo15. Mobolaji Osunsanya16. Olufemi Adeyemo

Corporate Governance & Statement of ComplianceThe Company is dedicated to the protection and promotion ofshareholders’ interests. The Company recognises the importanceof the adoption of superior management principles, its valuablecontribution to long term business prosperity and accountability toits shareholders.

The Company as a public company is required to comply withNigerian corporate governance standards as stipulated in theSecurities and Exchange Commission (SEC) Code of CorporateGovernance. The Company meets the requirements of the Nigeriancorporate governance standards by complying with the principlesunder the Code. For example, according to the Code, thecomposition of the Board of Directors should ensure diversity ofexperience without compromising compatibility, integrity, availabilityand independence, and it should consist of a mix of not more than15 Executive and Non-Executive Directors headed by a Chairman.In addition, the positions of the Chairman and the Chief ExecutiveOfficer should be held by different persons, in order to avoid undueconcentration of power. The Company complies with all theseprinciples.

The Company has adopted a Code of Business Conduct & Ethicswhich defines the Company’s mission within a corporate governanceframework. The Code was approved by the Board inDecember 2007 and is applicable to all employees (includingcontract staff and third party personnel seconded to the Company),managers as well as Directors and business partners of theCompany. It also requires all Directors and employees to be trainedand annually certified on the salient provisions of the Company’sCode of Business Conduct & Ethics. The training is conductedusing a web based training facility and is part of the induction andon-boarding process for new staff members.

COMPLIANCE OFFICE INITIATIVES

Recertification Exercise: In the year 2010, the Compliance Officeconducted the annual recertification exercise on the Code ofBusiness Conduct & Ethics for all staff and directors. All staffacross Africa were trained, certified or re-certified using differenttraining tools including web-based trainings. Oando maintains itsfervent commitment to good business practice culture in line withthe highest international standards.

Regional Site Visits / Compliance Monitoring: The ComplianceOffice in collaboration with the Control & Standards unit conductedspot checks on some retail outlets to ensure strict compliancewith the Company’s standards.

Group Wide Compliance Audit : The Compliance Officeconducted a compliance audit based on the laws and regulationsaffecting the Company’s businesses involving the use ofquestionnaires and verification of the responses culminating in aCompliance Audit Report to be implemented by the entities.


World Anti-Corruption Day: As a signatory to the UNGC, and ina bid to affirm its continuous commitment to maintaining the higheststandard in corporate reputation by combating corruption, thecompany commemorated the 9th International Anti- Corruption dayon December 9, 2010 (a day designated by the UN) by creatingawareness across the Company.

Internal Customer Satisfaction Survey: In line with the corporateobjectives, the Compliance Office conducted a half year survey inthe year to obtain feedback from staff on its activities and services.The survey covered questions on how the compliance officeimproved on ethical awareness in entities, the appointment of theCompliance Champions (Torch Bearers), effectiveness of theCompliance hotlines, responses to misconduct and unethicalpractices by the Compliance Office, sanctions meted out forviolation of the Company Code and policies amongst otherquestions. The result of the survey highlighted the fact that therehas been an overall improvement on the compliance and ethicalculture in the organisation.

As part of our effort to ensure the Company’s continuous adherenceto the principles of Corporate Governance and conducting businessin an ethical manner, we have signed on to the following internationaland local Corporate bodies, to which we are committed as activemembers.· Partnering Against Corruption Initiative (PACI) of The

World Economic Forum:The company joined PACI, a forum aimed at developingprinciples and practices that will result in a competitive levelplaying field, based on integrity, fairness and ethical conduct,in 2008.

· United Nations Global Compact: we signed on to the UNGCon the 10th of June 2009. Since joining, we have shown ourcommitment by:- Becoming one of the pioneer members of the Global

Compact LEAD; and- Redeploying one of our staff to the UNGC office in New

York to assist with strengthening the local networks.· Convention on Business Integrity (CBI): Oando signed on

to the CBI, an organisation with a vision to create a society ofZero tolerance for corruption, on the 16th of November 2009.The Chief Company Secretary & Compliance Officer is thechairperson of the Core Group of signatories to the convention

· Fraud Awareness Working Group (FAWG)A forum aimed at uniting multinational organisations operatingin Africa (who are potentially exposed to risks of fraud beingperpetrated against them), to fight against fraud in theirorganisations collectively.

Board of Directors’ Governance StructureThe Board of Directors of the Company is responsible for settingthe strategic direction of the Company and for overseeing andmonitoring its business affairs. The Board ensures that the Companyis fully aware of its responsibilities to all relevant stakeholders inthe conduct of its operations. The Board is responsible for the

development and implementation of sustainable policies, whichreflect the Company’s recognition of its responsibilities tocustomers, employees, shareholders, communities and theenvironment.

The Board of Directors of Oando recognises the importance ofbest corporate governance principles, its valuable contribution tolong term business prosperity and accountabil ity to itsshareholders.

The Board’s AuthorityThe Board of Directors scope of authority are set forth in theCompany’s Delegation of Authority in conformity with relevantlegislation and best practice recommendations.

There is a formal schedule of matters reserved for the decision ofthe Board, which is reviewed regularly. This includes (inter alia):· strategy and objectives;· business plans and budgets;· changes in capital and corporate structure;· accounting policies and financial reporting;· internal controls;· major contracts;· capital projects;· acquisitions and disposals;· communication with shareholders; and· board membership.

Board’s Composition and IndependenceThe Board of Directors has a broad range of expertise that coversthe oil sector, the Company’s main business and the geographicalareas. Each individual Director has experience knowledge,qualifications, expertise and integrity necessary to effectivelydischarge the duties of the Board of Directors.

The Company believes that experienced Directors with diverseindustry background are essential for the provision of successfulstrategic direction for the Company. The composition,competencies and mix of skills are adequate for its oversightduties and the development of the corporate vision and strategy.

The Board of Directors through its Governance & NominationsCommittee establishes which members are independent and alsorecommends the appropriate size of the board. The size of theBoard is pre-determined by Article 78 of the Company’s Articles ofAssociation.

Re-election of DirectorsA maximum of one third of the Directors, who are the longest inoffice since their last appointment are required to retire by rotationand are eligible for re-election.

Board’s Duties & ResponsibilityDirectors act in good faith, with due care and in the best interestsof the Company and all its shareholders – and not in the interestsof any particular shareholder – on the basis of relevant information.Each Director is expected to attend all Board of Directors meetings


and applicable committee meetings.The Company does not prohibit its Directors from serving on otherBoards of Directors. Directors are however, expected to ensurethat other commitments do not interfere with the discharge of theirduties. Directors shall not divulge or use confidential or insiderinformation about the Company.The Board in discharging its duties adopts the best practiceprinciples, some of which are highlighted thus:

· The Company believes that the Chairman of the Board shouldbe a Non-Executive Director.

· To maintain balance of interest and ensure transparency andimpartiality, a number of the Directors are independent. Theindependent Directors are those who have no materialrelationship with the Company beyond their Directorship.

· Directors abstain from actions that may lead to conflict ofinterest and are to ensure they shall comply with theCompany’s Policy on Related Party Transactions.

Training and Access to AdvisersThe Company has a set induction programme for new directorson the Company’s business and other information that will assistthem in discharging their duties effectively. The Company believesin and provides continuous training and professional education toits Directors. The Board of Directors and Board Committees havethe ability to retain external counsel to advice on matters, as theydeem necessary.

Working ProceduresThe Board of Directors meets according to a fixed schedule, set atthe beginning of each year, which enables it to properly dischargeits duties. As a rule, the Board of Directors meets at least five (5)times a year.

Non Executive Directors are required to meet separately fromexecutive members at least once a year.

All Directors are expected to be provided with a concise butcomprehensive set of information by the Company Secretary in atimely manner, concurrently with the notice of the Board meeting,no less than fourteen (14) days before each meeting. This set ofdocuments is to include:- an agenda;- minutes of the prior Board meeting;- key performance indicators, including relevant financial informationprepared by management, and clear recommendations for action.

The Board of Directors through the Company Secretary keepsdetailed minutes of its meetings that adequately reflect Boarddiscussions, signed by the Chairman and included voting resultson an individual basis where decisions are not unanimous. TheCompany keeps record of important Board decisions, such as theapproval of extraordinary transactions.

RemunerationThe remuneration of Non-Executive Directors is competitive and iscomprised of an annual fee and a meeting attendance allowance.The remuneration package shall, however, not jeopardise aDirector’s independence. Executive Directors are not paid feesbeyond their executive remuneration package. The Board ofDirectors shall, through its remuneration committee, periodicallyreview the remuneration paid to Directors. The Company publiclydiscloses the remuneration of each Director on an individual basis.The Company will not provide personal loans or credits to its Non-Executive Directors. Further, the Company shall not provide stockoptions to its Non-Executive Directors unless approved byshareholders in general meeting.

The Company Secretary is responsible to the Board, and is alsoavailable to individual Directors for advice and services.

The Chairman meets at least annually with Non-Executive Directorswithout the Executive Directors being present.


MEETINGS ATTENDED

Names Board Governance & Strategic Risk, Environmental, AuditNominations Planning & Health, Safety,

Finance Security & QualityExecutive Directors’J. A. Tinubu 5/5O. Boyo 5/5M. Osunsanya 5/5O. Adeyemo 5/5

Non-Executive DirectorM. Magoro, OFR 6/6A. Akinrele SAN ‡ 1/1 2/2O. Akpata 2/2Chief S. Anthony 6/6 2/4 2/2 3/4N.Appiah-Korang 1/2N. Burney † 3/3 1/1 1/1 1/1HRM M.A. Gbadebo, CFR 6/6 2/2 4/4O. Ibru † 1/1 2/2 1/1H. Mahmud * 3/3 2/2 2/2O. Okoloko † 3/3 1/1 1/1A. Pepple, CFR 6/6 2/4 3/3 2/2 2/2G. Sangudi † 3/3 3/3 1/1

Shareholder Members on the Audit CommitteeA. Ekpenyong § 2/2P. Eyanuku 4/4J. Onwughara 4/4K. B. Sarumi 2/2· ‡ - Independent Non-Executive· * - Retired· † - Resigned· § - Not nominated for election

Board CommitteeUnder the Articles, the Directors may appoint Committeesconsisting of members of the Board and such other persons asthey think fit and may delegate (any of their powers) to suchCommittees. The Committees are required to use their delegatedpowers to conform to the regulations laid down by the Board.Committee members are expected to attend each Committeemeeting, unless exceptional circumstances prevent them fromdoing so. All the Committees have terms of reference which guidesthem in the execution of their duties. Each Committee reports tothe Board of Directors. Each Committee provides draftrecommendations to the Board on matters that fall within the Board’sambit. The following Committees are currently operating at theBoard level:• Audit Committee (a Statutory Committee with shareholder

members);• Strategic Planning and Finance Committee;• Governance and Nominations Committee; and• Risk, Environmental Health, Safety, Security and Quality

Committee.

The Company’s Board Committee structure is as follows:

Board of Directors

Audit Committee Strategic Planning Governance and Risk, Environmental& Finance Nominations Health ,Safety,Committee Committee Security and

Quality Committee

Strategic Planning and Finance CommitteeThe Strategic Planning and Finance Committee assists the Boardof Directors in performing its guidance and oversight functionseffectively and efficiently, by specifically defining the Company’sstrategic objectives, determining its financial and operationalpriorities, making recommendations regarding the Company’sdividend policy and evaluating the long term productivity of theCompany’s operations. In 2010, the Strategic Planning and FinanceCommittee met three times.


STATUTORY COMMITTEEAudit CommitteeThe Audit Committee was established in compliance withSection 359(3) of the CAMA, which requires every listed companyto have an audit committee. In accordance with Sections 359(3)and (4) of the CAMA, the Audit Committee is made up of sixmembers, three Non-Executive Directors and three shareholdersof the Company, who are elected at the Annual General Meeting.The members of the Audit Committee are not required to beindependent. The Audit Committee members meet at least threetimes a year, and the meetings are attended by the appropriateexecutives of the Company, including the Chief Financial Officer,Head, Group Risk Management and Control, and Head, GroupInternal Audit

The Audit Committee’s duties include keeping under review thescope and results of the external audit, as well as the independenceand objectivity of the auditors. The Committee also keeps underreview internal financial controls, compliance with laws andregulations and the safeguarding of assets and the adequacy ofthe plan of the internal audit and reviews its audit reports. TheCommittee held four meetings in 2010.

The members of the Audit Committee were as follows:Chief Sena Anthony - Non-Executive DirectorHRM A. Gbadebo, CFR - Non-Executive DirectorAlhaji Hamid Mahmud - Non-Executive DirectorMs. Amal Pepple - Non-Executive DirectorMr. Kabir Babatunde Sarunmi - ShareholderMr. Job Onwughara - ShareholderMr. P. Eyanuku - ShareholderMr. Akpan Ekpenyong - Shareholder

HRM Michael Adedotun Gbadebo, CFR, The Alake of EgbalandMs. Amal Pepple, CFRChief Sena Anthony(Please refer to page 41 of the annual report for a brief curriculumvitae)

Mr. Kabir Babatunde Sarumi- Shareholder MemberKabir Babatunde Sarumi holds a Bachelor of Sciences degree inAccounting from the University of Lagos, Nigeria and a Diploma inBusiness and Industrial Law from the same Institution. He is amember of the Nigerian Institute of Internal Auditors and hasauthored several business guide books and manuals. He joinedNigerian Airways Limited in 1977 as a Revenue/ExpenditureAccounting officer and retired meritoriously in 2002 as the DeputyChief Accountant of the Company.

Mr. Job OnwugharaMr. Onwughara holds a Master of Science degree in Banking andFinance from the University of Ibadan, Nigeria. He is a fellow of theChartered Institute of Bankers, London/Nigeria, an Associate ofthe Institute of Credit Management, London and Member of theBritish Institute of Management. He has served at various Manageriallevels at Savannah Bank and Crown Flour Mill Limited.

The Strategic Planning and Finance Committee of the Company ischaired by Ms. Amal Pepple, CFR.The members of the Strategic Planning and Finance Committeewere as follows:Mr. Oghogho Akpata Mr. Oboden IbruChief Sena Anthony Mr. Onajite OkolokoMs. Appiah-Korang Ms. Genevieve SangudiMr. Navaid Burney Ms. Amal Pepple, CFR

Governance and Nominations CommitteeThe Governance and Nominations Committee is responsible forthe development of compliance with and periodic review of theCompany’s corporate governance policies and practices, the reviewand monitoring of policies concerning shareholder rights, conflictresolution, ethics, disclosure and transparency, evaluation of theCompany’s internal documents (organisation and process), thereview and setting of the By laws of all of the Board Committees,identifying qualified directors and senior executives and ensuringthat the Company’s policies support the successful recruitment,development and retention of directors and managers.

The Governance and Nominations Committee is chaired by Mr.Oghogho Akpata and comprises three Non-Executive Directors,one of whom is an independent Director. The Governance andNominations Committee held three meetings in 2010.

The members of the Governance and Nominations Committee wereas follows:Mr. Ademola Akinrele, SAN Mr. Navaid BurneyMr. Oghogho Akpata Mr. Oboden IbruChief Sena Anthony Alhaji Hamidu MahmudMs. Appiah-Korang Ms. Amal Pepple, CFR

Risk, Environmental Health and Safety, Security and QualityCommitteeThe Risk, Environmental Health and Safety Committee isresponsible for reviewing the policies and processes establishedby management which are designed to implement the risk,environmental, health and safety quality policy of the Company andensuring the Company’s compliance with international standardsof risk, environmental, health and safety quality.

Risk, Environmental Health and Safety, Security and QualityCommittee is chaired by Ms. Appiah-Korang

The members of the Risk, Environmental Health and SafetyCommittee were as follows:Ms. Appiah-KorangChief Sena AnthonyMr. Navaid BurneyHRM Oba Gbadebo, CFRMs. Amal Pepple, CFRMs. Genevieve Sangudi


Mr. Peter Eyanuku1

Mr. Peter Eyanuku studied Mechanical Engineering and has servedin various organisations in different capacities and has also servedwith the National Directorate of Employment, Lagos as well as theLagos State Health Management Board. He was a Member of theAudit Committee of the United Bank for Africa PLC and is presentlyalso a Member of the Audit Committee of Airline Services & LogisticsPLC.

The committee held four meetings in the financial year endedDecember 31, 2010.The Companies and Allied Matters Act, 2004’requires that everypublic company have an audit committee and stipulates that anumber of shareholders equal to the director members of thiscommittee must be members of the audit committee.

Directors’ DeclarationsNone of the directors have:– ever been convicted of an offence resulting from dishonesty,

fraud or embezzlement;– ever been declared bankrupt or sequestrated in any jurisdiction;– at any time been a party to a scheme of arrangement or made

any other form of compromise with their creditors;– ever been found guilty in disciplinary proceedings by an

employer or regulatory body, due to dishonest activities;– ever been involved in any receiverships, compulsory

liquidations or creditors voluntary liquidations;– ever been barred from entry into a profession or occupation;

or– ever been convicted in any jurisdiction of any criminal offence

or an offence under any Nigerian or South African legislation.

Interests of Oando’s Directors in terms of The Equity IncentiveschemeThe Executive Directors stand to benefit from the employee equityincentive scheme. See paragraph titled Staff Equity ParticipationScheme below for details of the scheme.

Directors’ Interests in TransactionsNone of the directors had a direct material interest in anytransactions that were effected by Oando during:– the current or immediately preceding financial year; or– any preceding financial year and remain in any respect

outstanding or unperformed.

However, some of the directors hold directorships in othercompanies or are partners in firms with which Oando had materialtransactions during the current financial year, as summarised below:Ocean and Oil Holdings (Nigeria) Limited (“OOH”)OOH is a diversified principal investment holding company with anindirect controlling stake in Oando held through Ocean and OilInvestments Limited. Oando’s directors who are also directors ofOOH are Mr. Jubril Adewale Tinubu and Mr. Omamofe Boyo.

The day-to-day operational management of the Group’s activitiesis delegated to the Group Chief Executive, who has direct

responsibility for all operations and activities. He is supported inthis by the Deputy Group Chief Executive and the Group LeadershipCouncil which comprises, in addition to them, the Chief ExecutiveOfficers of the operating subsidiaries, plus the Chief Financial Officer,Chief Human Resources Officer, the Chief Compliance Officer &Company Secretary, the Chief Legal Officer, Chief Engineering andTechnology Officer, Chief Environment, Health, Safety, Security,Quality, State & Community Affairs Officer and the Chief CorporateServices Officer.

Internal Control and RiskThe Directors have overall responsibility for ensuring that the Groupmaintains a sound system of internal controls to provide them withreasonable assurance that all information used within the businessand for external publication is adequate, including financial,operational and compliance control and risk management, and forensuring that assets are safeguarded and therefore thatshareholders’ investment is protected. There are limitations in anysystem of internal control and, accordingly, even the most effectivesystem can provide only reasonable, and not absolute, assuranceagainst material misstatement or loss.

In line with good practice, the Company has an Internal Audit unitthat carries out routine and random checks on the Company’soperations, including fixed assets and stocks. The unit is alsoresponsible for investigating frauds and misuse or misappropriationof the Company’s assets.

The Company also has an Internal Risk & Control Unit, which laysdown and tests the controls and processes to ensure that theassets of the Company are safeguarded. The Unit is currentlyheaded by a manager with vast control and processes experience.

The key procedures that the Board has established and which aredesigned to provide effective internal control for the Group are:– The Board sets out the Group’s authority procedures which

are adopted by all the subsidiary companies.– The issue of a Group accounting and procedures manual

which sets out the Group’s accounting practices, revenuerecognition rules, accounting under NASB and IFRS and bidapproval processes.

– The application of a rigorous annual budgeting processfollowing a detailed entity and Group strategy review. All budgetsare subject to approval at Board level.

– The Group Leadership Council is responsible for reviewingthe operational results, communication and application ofGroup-wide Policies, procedures and strategy on operationalmatters which are communicated both to the Board and downto the operating units.

– The formal monthly operational review by the ExecutiveDirectors together with the divisional management teams toassess the financial and operating performance and discussthe ongoing development of each business unit and thecomparison of detailed monthly management reports againstbudgets, forecasts and prior years. In addition, the GroupChief Executive and Chief Financial Officer prepare a quarterly


report for the Board on key developments, performance andissues in the business.

– The identification and mitigation of major business risks is theresponsibility of operating Company management. Eachoperating company maintains internal controls and proceduresappropriate to its structure and business environment, whilstcomplying with Group policies, standards and guidelines.

– Insurance cover is maintained to insure all the major risk areasof the Group based on the scale of the risk and the availabilityof cover in the external market.

– The use of external professional advisers to carry out duediligence reviews of potential acquisitions.

Enterprise Risk ManagementIn the last two years, the world has witnessed both financial crisessuch as the global financial meltdown and operational crises suchas the oil spills in the Gulf of Mexico. Both situations have furtherbuttressed the need for sound financial and operational riskmanagement across institutions.

Oando has reacted, by strengthening its risk management program.We have established an Enterprise Wide Risk ManagementFramework, which was approved by the board of Directors inNovember 2010.

The objective of the framework is to provide appropriate guidanceto ensure the Company’s actions and activities with respect to riskmanagement are consistent with the Company’s desire to sustaincompetitive advantage, maintain shareholder confidence and meetregulatory requirements.

Achieving this objective, would entail removing the traditionalfunctional, divisional, departmental or cultural barriers and replacingthem with a single view of risk across the group. It is also aimed atmoving the Company to a risk smart workforce and environmentwhich ensures that the Company has the capacity and tools to beinnovative while recognizing and respecting the need to be prudent.

Relations with Shareholders

CommunicationThe Board considers effective communication with its investors,whether institutional, private or employee shareholders, to be ofuttermost importance.

The Company reports formally to shareholders four times a year,with the quarterly results announcement and the preliminaryannouncement of the full-year results. Shareholders are issuedwith the full-year Report and Accounts. These reports are postedon the website.

The Company also makes other announcements from time to time,which can be found on the website.

Members of the Group Leadership Council meet institutionalinvestors on a regular basis, providing an opportunity to discuss, inthe context of publicly available information, the progress of thebusiness. Institutional investors and analysts are also invited toattend briefings by the Company following the announcements ofthe full- year and quarterly results. Copies of the presentationsgiven at these briefings are posted on the website.

Constructive Use of The Annual General MeetingThe notice of meeting is sent to shareholders at least 21 workingdays before the AGM. The Directors encourage the participation ofshareholders at the AGM, and are available, both formally duringthe meeting and informally afterwards, for questions. The Chairmenof the Audit and Governance and Nomination Committees are allavailable to answer questions at the AGM.

Compliance StatementThe Company has complied with the SEC Code of CorporateGovernance throughout the financial year ended 31 December2010.

DividendThe Directors are pleased to recommend the payment of finaldividend of N 3.00 per ordinary share of fifty kobo each held. Therecommended dividend is subject to the deduction of appropriatewithholding taxes. If the dividend recommended is approved anddeclared, dividends due to shareholders whose names appear inthe Company’s Registers of Members (Nigeria and South Africa)kept in Nigeria as at the close of business on 29th of April 2011 will,on the 31st of August 2011, either be electronically transferred toshareholders’ bank accounts or, in the absence of suitable mandateshave dividend cheques posted to them, or will have their accounts,at their CSDP or broker credited.

Any dividend payable on or in respect of an Oando share which isunclaimed may be invested or otherwise made use of by Oando, atthe discretion of the directors, until claimed. Any dividends whichremain unclaimed for a period of 12 years from the date when suchdividends became due for payment shall, if the directors so resolve,be forfeited to the Company. No unpaid dividend shall bear interestagainst the Company.

Oando has maintained an informal dividend policy as a result ofextensive growth in its businesses. As the Company transits fromits aggressive growth phase to a consolidation phase, the directorswill move to adopt a more formal dividend policy which will balancesteady dividend payments with adequate equity retention for futuregrowth. In the interim, the Company has not entered into anyarrangements for which future dividends have been or will bewaived.


Shareholders Range Analysis as at December 31, 2010Register date: 31 December 2010Issued Share Capital: 1,810,169,256 shares

SHAREHOLDER SPREAD No of Holders % of Holders No of Shares % Holding1 - 1000 186,489 71.61 66,766,954 3.691,001 - 5,000 57,296 22.00 119,401,419 6.605,001 - 10,000 8,320 3.19 58,576,918 3.2310,001 - 50,000 6,773 2.60 138,569,700 7.6550,001 - 100,000 752 0.29 53,697,940 2.97100,001 - 500,000 589 0.23 115,070,925 6.36500,001 - 1,000,000 94 0.04 67,999,665 3.761,000,001 - 5,000,000 91 0.03 177,270,083 9.795,000,001 - 10,000,000 13 0.00 91,518,796 5.0610,000,001 - 50,000,000 17 0.01 324,790,250 17.9450,000,001 or more 4 0.00 596,506,606 32.95Total 260,438 100 1,810,169,256 100

SHAREHOLDER TYPE No of Holders % of Holders No of Shares % HoldingBanks/Insurance 216 0.08 20,648,085 1.14Brokers 457 0.18 54,740,707 3.02Endowment Funds 270 0.10 3,168,965 0.18Individuals 254,434 97.69 461,620,329 25.50Investment Companies 126 0.05 3,336,887 0.18Medical Aid Schemes 9 0.00 24,218 0.00Mutual Funds 123 0.05 89,616,992 4.95Nominees/Trust Companies 1,523 0.58 394,669,502 21.80Other Corporations 513 0.20 29,255,080 1.62Pension Funds 243 0.09 290,733,298 16.06Private Companies 2,508 0.96 439,936,669 24.30Public Companies 16 0.01 22,418,524 1.24Total 260,438 100 1,810,169,256 100

Directors’ shareholdingsThe holdings of ordinary shares by the directors of Oando as at 31 December 2010 being the end of Oando’s immediately precedingfinancial year, are set out in the table below:

Name Shareholding Percent Ownership(Number of Shares)Direct Indirect (% Shareholding)

Gen. M. Magoro, (Rtd) OFR Nil Nil NilMr. Jubril Adewale Tinubu Nil 1,995,620 0.11024%Mr. Omamofe Boyo Nil 1,224,948 0.06767%Mr. Mobolaji Osunsanya 53,998 641,731 0.03843%Mr. Olufemi Adeyemo 60,000 762,648 0.04545%Chief Sena Anthony 67,769 Nil 0.00374%Mr. Oghogho Akpata Nil Nil NilHRM Oba Michael Adedotun Gbadebo 30,000 Nil 0.00166%Ms. Amal Pepple CFR 7,500 Nil 0.00042Ms. Nana Afoah Appiah-Korang Nil 30,000,000 1.65730%


2010 Corporate Social Responsibility Report (CSR)Oando is committed to Corporate Social Responsibility; in 2010the Group further contributed to the achievement of the MillenniumDevelopment Goals (MDGs) through the implementation ofsustainable social investments most relevant to stakeholders andhost communities in our area of operation.

EducationOando education projects are geared towards empowering hostcommunities through basic education. Our aim is to contribute tothe achievement of the Millennium Development Goals (MDGs)targeted at ensuring access to universal primary education by2015.

The Oando Education projects include:

Adopt – A - School InitiativeThe Adopt-A-School initiative which is the cornerstone of oureducation programme , initiated in April, 2007 in partnership withthe Ministry of Education, aims at supporting the development ofselected schools over a five year period, through the renovation offacilities; teacher capacity building, provision of learning aids andsupporting libraries. The goal is to adopt at least 100 primary schoolsacross West Africa by 2015.

Since inception, twenty-eight government-owned primary schoolshave been adopted in our host communities under the Adopt-A-School Programme. The schools located in Akwa-Ibom, Bauchi,Cross River, Delta, Katsina, Lagos, Ogun, and Rivers State areeither along the right of way of our pipelines or in the surroundingsof our depots or service stations.

In 2010, four more primary schools were adopted in Lagos: Ogo-Oluwa, Temidire, Idi-Odo primary schools in Gbagada andArchbishop Taylor Primary School in Victoria Island. Oando alsosponsored key school events, such as the sports days and prize-giving days.

In commemoration of the 2010 Children’s Day celebration and in linewith the corporate social responsibility drive of the organisation,members of staff donated books to students of primary schools underthe Adopt-A-School programme across the country. The bookdonation by our staff was further proof that giving back to thesociety is not just a corporate vision, but a dream which the entirestaff believe in. The donated books are intended to boost literacy andensure that students who are willing and able to read are provided thenecessary materials critical for the achievement of their aspirations.

ScholarshipsOando awards 152 scholarships annually and is actively involvedin various annual scholarship awards with a view to promotingeducation for youths in Nigeria. The grants are designed to relievethe financial burden of less privileged children who have eitherdropped out of school or have never had the opportunity for formal

basic education. Scholarships in 2010 included:· Scholarships for 12 secondary/primary school children in the

Bundu and Onne communities in Rivers state.· Sponsorship of Back-To-School grants for 90 indigent children

from communities where Gaslink operates in Lagos.· Sponsorship of the tuition of 40 members of the Xplicit Dance

Group an entertainment enterprise made up of mostly orphansand indigent children.

Sustainable Community DevelopmentThe Group’s strategy is focused on proactive handling of communitymatters to promote mutual co-existence between our Companyand communities within our areas of operation. This strategy isdriven by the acronym – POWERS, which translates as follows:Partnership with the communities, Ownership interest withcommunities, Win-win for both parties, Empowerment of locals,Respect for host communities and Sustainable CommunityDevelopment.

Social Development: Oando is adaptable to the diversity of eachcommunity’s needs and is actively involved in improving the qualityof life in our host communities. We believe in driving developmentusing a ‘bottom-up’ approach: all projects implemented are identifiedand prioritised through consultations with the community. The Groupcontinually provides basic social infrastructure which we see as anecessity of modern life, not a luxury.

Economic Empowerment: Oando’s staffing policy is to empowerhost communities by recruiting skilled, semi skilled and unskilledlabour to fill suitable positions. The group also encourages our jointventure partners and contractors to fill suitable positions from hostcommunities as a form of empowerment.

SponsorshipsOando makes meaningful contributions to sports in Nigeria; thegroup consistently supports the development of the mental andphysical capacities of Nigerian youth through football, polo, tennisand golf tournaments. Oando sponsors Mohammed Muazu, ayoung man with the ambition of becoming a professional golfer onthe world circuit. Mohammed has won numerous victories at tour-neys across Africa where he has become a force to be reckonedwith in amateur golfing. In July 2010, we awarded Mohammed a fullscholarship for an 18-month Associate Degree in Golf Manage-ment, at the Golf Academy of America.


Oando Foundation - The FutureThe Group’s desire to further enshrine our contributions to societaldevelopment over and above the implementation of communityprojects directly related to the company’s core business operationsled to an in-depth and participatory review of our CSR initiatives,practices and procedures.

Our increased focus on sustainable giving has led to the birth ofOando Foundation. The Foundation governed by a Board of Trusteeswill be an independent charity, with a vision to transform lives incommunities through education and economic empowerment

Developments & Initiatives of the Human Capital ManagementDepartmentThe year 2010 was seen as a period of further consolidationregarding the Human Capital Initiatives over the last three years,with a few additions.

Talent Management and People DevelopmentThe first phase of the Oando Corporate University (OCU) projectrollout was achieved with the launch of electronic learning coursesin partnership with SkillSoft, a world renowned provider of e-learningcontent. In the course of the year, we leveraged on our robustOracle Learning Management platform to provide access to over100 self paced e-learning courses that address specific businessmanagement and soft skills.

The process of designing and developing the business curriculumfor the Oando Corporate University (OCU) commenced in line withour objective to entrench learning and development that is businessfocused and is “Oando centric”. Instructional designers drawnfrom trusted and experienced professionals across the Group havebeen trained and mobilised to design and facilitate courses inspecific non-technical areas. In the coming months, otherprofessionals across the Group will be trained to serve as facultyin the OCU.

In line with our commitment to continue to invest heavily in thedevelopment of our employees, we deepened our focus on thedeployment of in-house and in-plant training programmes tailoredspecifically to the business needs of the Group. In the same vein,we identified the need to ensure our managers were financiallysavvy and entrepreneurial in orientation by making it an objectivefor all managers across the Group to enroll in the online financetraining module. More than half of the population enrolled and areundergoing certification with the remainder to join in 2011.

Furthermore, 2010 witnessed the launch of managed access tothe Harvard Manage Mentor (HMM) Learning Portal for OandoPLC. The HMM portal is a single destination for high-impactenterprise learning for critical management and leadership needs.35 employees comprising of executive level and senior managerswere provided access to the portal as part of a pilot deployment.This access will be extended to all management employees withinthe first quarter of 2011.

DonationsThe Group made various donations to laudable causes and charitable concerns including orphanages, retirement homes, special needsschools across Nigeria, as listed below:

S/N DESCRIPTION AMOUNT1 Launch of Sir Ahmadu Bello Memorial Foundation 5,000,0002 Sponsorship of the Zuru Festival of Arts & Culture Emirate U’hola 500,0003 Sponsorship of Mohammed Muazu at Golf Academy of America 5,168,8864 Sponsorship of 40-members of Xplicit Dance Group 3,825,0005 Donation of 10,000 Adopt-A-School branded exercise books to Schools 390,0006 Donation of AGO and PMS to the Lagos State Security Trust Fund 49,402,1307 Financial support to offset medical bill of Augustina Okosodo 438,2758 Rotary International 1910 District Global Humanitarian Projects 1,000,0009 Donation of mathematical sets & 4-figure tables to Project “RAISE” 430,00010 Support to build Mopol 22 project office 2,000,00011 Donation of AGO to Heritage Homes and Little Saints Orphanages 544,80012 Sponsorship of Nigerian Society for the Blinds May Ball 100,00013 Nigerian Environmental Society (NES) Annual Lecture 50,00014 Onne and Bundu Community Scholarships 960,00015 FRSC Public Enlightenment Campaign 250,00016 NUPENG staff Advance Strategic Leadership Course 250,00017 Ibadan Remand Home and Child Care Unit, Oyo 250,00018 Citadel of Grace Orphanage Home, Lagos 250,00019 Chosen Child Orphanage & Care Centre, Lagos 250,00020 Family Care Eduvision International Ltd., Abuja 250,00021 Motherless Babies Home, Gombe 250,00022 Orphanage Home, Sokoto 250,00023 Pope John Paul II Good Samaritan Home, Calabar 250,00024 Edo Orphanage Home, Benin 250,000 TOTAL 72,309,091


Finally, with 241 training sessions implemented across the Groupand over 8000 training hours in the year addressing technical andnon-technical learning requirements, employees continued toacquire relevant skills to succeed in their current jobs and also totake on higher level assignments in line with corporate and individualcareer development plans.

Graduate Trainee ProgrammeThe Oando Graduate Trainee Programme continues to attract thevery best young minds from across various technical and non-technical disciplines. A total of 16 (sixteen) trainees were admittedinto the programme in 2010 after an extensive and thoroughselection process following very stringent criteria to ensure thatonly the best candidates are enrolled on the programme.

Successful trainees from the 2009 batch have now been fullyintegrated into the Company as full term employees. With thesuccessful implementation of the GT programme, we have madesignificant progress in growing talent and creating a pipeline oftechnically and morally competent individuals. These employeeswho would be the champions of the culture and core values of theorganisation and cater for emerging human resource requirementsof the company now and in the future will continue to be equippedwith the relevant skills as we provide necessary tools and resourcesto help them develop in their career.

The Oando Mentoring ProgrammeThe Oando Mentoring programme has been revamped andrestructured to offer a formal and structured setting in whichbeneficial one-to-one relationships between employees and selectedmentors are developed. Acting as friends, teachers and guides,mentors are required to encourage and advise their mentees bysharing their own experiences, information and knowledge thatcan help mentees meet their professional and personal developmentgoals.

The mentoring programme also seeks to help employees imbibethe Oando core values as defined under TRIPP, create a sense ofbelonging and foster loyalty to the brand and ultimately improveretention of employees across the Group.

Remuneration, Benefits and Employee WelfareDuring the course of the year, several remuneration and salarysurveys were carried out to confirm our competitiveness within ourmarket and in line with our corporate reward strategy. The Companyalso continued to maintain her reputation as an employer of choiceas salary reviews were implemented with employees receiving apay rise to help cushion the effects of inflation in the economy.In a bid to ensure that pay within each of the Company’s businessentities remains competitive within the industry where the businessexists, the pay structures of the business entities were revampedand re-aligned for better efficiency in salary/pay administration.Furthermore, eligible employees received incentives in the form ofboth cash and shares, based on both individual and businessperformances, under the Oando Management Performance Plan(OMPP), Oando Profit Sharing Plan (OPSP) and the GCE/Entitydiscretionary bonus plan. Employees across the Group are alsobeing sensitized on the need to view remuneration from a “total

rewards” perspective and now have the facility to view their “TotalRewards Statement” via our Oracle HR self service platform.

A newly revised and detailed employee handbook that sets forthmajor points of employment with the Company as well as requiredstandards and mutual expectations between the organisation andemployees was also published in 2010.

Recruitment, Selection and Attrition ManagementIn line with our objective to attract and retain the best talents in allthe functional areas within the Group especially in our growthbusinesses in the upstream and mid-stream sector, we held 2major career fairs in 2010. These events, specifically organised toattract talent into our upstream business held in the United Kingdomand the United States and afforded us the opportunity of bringingon board, highly experienced professionals who have distinguishedthemselves in their various fields of expertise working with worldclass organisations.

We strengthened our partnership with SHL-UK a world classHuman Resources Management Solutions Company, in thedeployment of the SHL Ability and Occupational testing platform inthe recruitment and selection process across the Group.

The SHL Ability and Occupational testing platform affords us aworld class platform to effectively assess the suitability of fresh(inexperienced) graduates for defined entry level roles within theorganisation. This system has also been fully deployed in theassessment of all Graduate Trainee Programme candidates.

Finally, in 2010, a total of 116 full term employees were employedinto the organisation. 23 employees who joined the Company werebrought in to fill various positions across the Group in theManagement Staff Cadre and 93 in the Non-Management Staffcadre. With an overall normal attrition rate of 6% in 2010, theCompany continues to attract and retain required talent to effectivelyman its operations to achieve set objectives.

Leadership Development and Succession PlanningThe Oando People Council (OPEC) was strengthened as a forumto focus on talent management initiatives. There is now a heightenedemphasis on the accelerated development pool and successionplanning framework to ensure that talent is not only identified andnurtured but the process of differentiation is achieved. This has nodoubt helped in contributing to our retention ability as evidenced bythe low attrition rate.

Oando Employee Equity Incentive Scheme (OEEIS)The year ended 31st December 2010 was year 3 of cycle 2 of theOando Staff Equity Participation Scheme. This year 3 marks theend of the 2nd cycle of the Scheme. A total of 32,448,176 unitswere offered to 428 eligible employees under the Stock OptionPlan at a strike price of N66.00. To date no employee has exercisedtheir options to take up the shares. Thus far, a total of 200,000 unitsare listed on the floor of the Nigerian Stock Exchange, under the1st scheme cycle and have earned a cumulative bonus of 100,000units.


ConclusionIn 2010, we continued to consolidate on the gains of the initiatives ofthe last three years as we took on fresh challenges of ensuring ahighly motivated, engaged and competent workforce. Our specificand determined focus on employee Career Development has helpedpropel the organisation in the desired direction in relation tomanpower capability development.

Environmental Health Safety Security and Quality/ SCAThis report presents an overview of Environmental Health SafetySecurity and Quality (EHSSQ) key achievements in line with theCompany strategic vision for 2010.

In line with Oando’s determination to continue providing petroleumproducts and services as a world class company, Oando MarketingPLC (OMP) and Oando Gas & Power Limited (OGP) upgraded theirISO 9001 certification status to the latest, 9001-2008 edition, whiletwo other subsidiaries, Oando Supply & Trading Limited (OST) andOando Exploration & Production Limited (OEPL) have also beenawarded the latest ISO 9001:2008 certification by the StandardsOrganization of Nigeria (SON). Through these Quality ManagementSystems, Oando has demonstrated its ability to deliver superiorquality products and services while ensuring customer satisfaction.Staff awareness and capability on EHSSQ/SCA was furtherenhanced through the rigorous and specific EHSSQ/SCA trainingsnecessary to guarantee the safety of people and assets, as well asprevent pollution of the environment in which Oando companiesoperate.

The EHSSQ department supported key projects such as obtainingprovisional EIA (Environmental Impact Assessment) approval forthe Akepo Field (OML 90). The department also established &implemented Security plans for Rig operations while assessment ofcritical assets was completed for Oando Exploration & ProductionLimited and Oando Energy Services. Full compliance of Akute PowerPlant to standard requirements of operational safety in a processinvolving a detailed Hazardous Area Classification (HAC),procurement and installation of a robust alarm/fire protection systemand training of operational staff was also achieved.

Amongst all, most of our key achievements are listed below:· Successful EHSSQ Week and World AIDS Day as part of

awareness strategy· Award of ISO 9001:2008 Certification to Oando Marketing PLC,

Oando Exploration & Production Limited, Oando Supply & TradingLimited and Oando Gas & Power

· Completed the Integrity Assessment of Gaslink’s PolyethylenePiping Network.

· EHS –MS Audits, Management facility Inspections and follow upaudits

· Deployment of Drug & Alcohol, Environment Impact Assessment,Medical Care, Emergency Response, Security, Spil l

Management, Transport and Community Relations policiesamongst others

· Trained staff/contractors: Trainings such as Stress Management,BOSEIT, First Aid, Survival Swimming, Advance Fire Fighting forFire Marshals, ISO 14001 Environmental Management System,OHSAS 18001, OHSA 1910.PSM,NEBOSH IGC, EHS Level 1, 2 & 3 trainings and EHSAccountability and Compliance Culture were conducted.

· Carried out Environmental Evaluation Reports (EERs) for 75 ofOMP’s service stations.

· Conducted Environmental Management Review (EMR) for somefacilities in Oando Marketing PLC.

· Built up a good relationship with our regulatory bodies byparticipating in various regulatory standard reviews such as theNational Environmental Regulations and Guidelines forManagement of Oil Spill and Oily Waste in Nigeria, NationalRegulations and Guidelines for Oil Spill Recovery, Clean–Up,Remediation and Damage Assessment, etc. Also, a corporatemember of the Federal Ministry of Environment Committee onEnvironmental Sensitization and awareness in Oil ProducingAreas of Nigeria.

· Carried out Environmental Management Review Audit for OandoMarketing PLC Terminals.

· Initiated Group-wide Defensive Driving training sessions for allentity operational drivers following intelligence from RTA statisticsacross entities.

· Rolled out OG&P Distribution Integrity Management Programand drove the implementation of agreed action items under the2010 plan viz: Baseline leak survey of entire GNL network;Upgrade of CP system; Deployment of surveillance strategies;engagement of Pipeline Integrity Engineer etc.

· Rendered professional support on Engineering and Technology(ETO) projects (Horizontal Directional Drilling, pre-commissioningmaterials inspection compliance audits for EHGC as well asTechnical Evaluation/Design review inputs at GLII Desandingproject).

· Managed the EIA Impact Mitigation Monitoring for Akute PowerPlant and drove close-out of all identified action items punch-liststyle, including initiating a consultancy study on plant noisemitigation.

· Developed generic QA/QC and EHS Plans for OGP IPPprospects on Alausa, Ikeja City Mall and FAAN.

· Developed and implemented EHS Case for Rig OES Integrity.· Operated OES Integrity for 365days without Lost Time Injury

(LTI).· Carried out free Medical Surveillance test for all OMP Transporters

drivers.· Won, for the second year running, the Lagos State Ako- Eko

Environmental Summit on Green Environmental AssessmentAward for 2010.


The figure below illustrates Oando PLC EHS Performance for 2010

OANDO PLC EHS 2010 PERFORMANCE REVIEW

AwardsIn 2010 Oando won “Company of the year” by the CWC Group,organizer of the Nigeria Oil & Gas (NOG) Conferences.In 2010 Oando won the ‘Best oil and gas deal in Africa’ award forthe acquisition of 15% stake in two offshore oil mining leases.

Net Book Value of Fixed AssetsInformation regarding the Group’s asset value and notes thereonare contained in Note 4 of the financial statements on page 71 ofthis Report. In the opinion of the Directors, the market value of theCompany’s properties is not lower than the value shown in thefinancial statements.

Substantial Interest in SharesOcean and Oil Investments Limited is the highest single shareholderin the Company holding 245,829,285 units representing 13.58% ofthe issued shares.

AuditorsPricewaterhouseCoopers, have indicated their willingness tocontinue in office as the Company’s auditors in accordance withSection 357(2) of the Companies and Allied Matters Act, 2004

By Order of the Board

Oredeji K. Delano (Mrs.)Company Secretary


In compliance with section 359 (6) of the Companies and AlliedMatters Act 2004, we the members of Oando Plc Audit Committeehave, on the documents and information made available to us:a. Reviewed the scope and planning of the audit requirementsb. Reviewed the external Auditors’ Management Controls Report

for the year ended December 31, 2010 as well as theManagement response thereto,

and can ascertain that accounting and reporting policies of theCompany for the year ended December 31, 2010 are in accordancewith legal requirements and agreed ethical practices.

Dated this 30th of March 2011

________________________HRM, Oba Gbadebo, CFRChairman, Audit CommitteeMs. A. Pepple, CFR - DirectorChief S. Anthony - DirectorMr. K. B. Sarumi - ShareholderMr. J. Onwughara - ShareholderMr. P. Eyanuku - Shareholder

Report of theAudit Committee


CONTENTS PAGE

Statement of Directors Responsibilities 60

Report of the Independent Auditors 61

Balance Sheet 62

Profit and Loss Account 63

Statement of Cash Flows 64

Summary of Significant Accounting Policies 65-69

Notes to the Financial Statements 69-87

Statement of Value Added 88

Five-year Financial Summary 89-90

Financial Statements31 December 2010


i. Responsibilities in Respect of The Financial StatementsThe Companies and Allied Matters Act requires the directorsto prepare financial statements for each financial year thatgive a true and fair view of the state of financial affairs of theCompany at the end of the year and of its profit or loss. Theresponsibilities include ensuring that the Company:

(a) keeps proper accounting records that disclose, with reason-able accuracy, the financial position of the Company and com-ply with the requirements of the Companies and Allied MattersAct;

(b) establishes adequate internal controls to safeguard its assetsand to prevent and detect fraud and other irregularities; and

(c) prepares its financial statements using suitable accountingpolicies supported by reasonable and prudent judgementsand estimates, and are consistently applied.

The directors accept responsibility for the annual financialstatements, which have been prepared using appropriate ac-counting policies supported by reasonable and prudent judge-ments and estimates, in conformity with the Nigerian Account-ing Standards and the requirements of the Companies andAllied Matters Act.

The directors are of the opinion that the financial statementsgive a true and fair view of the state of the financial affairs ofthe Company and of its profit. The directors further acceptresponsibility for the maintenance of accounting records thatmay be relied upon in the preparation of financial statements,as well as adequate systems of internal controls over finan-cial reporting.

Nothing has come to the attention of the directors to indicatethat the Company will not remain a going concern for at leasttwelve months from the date of this Statement.

ii. Responsibilities in respect of Corporate GovernanceOando PLC is committed to the principles and implementationof good corporate governance. The Company recognises thevaluable contribution that it makes to long-term business pros-perity and to ensuring accountability to its shareholders. TheCompany is managed in a way that maximises long term share-holder value and takes into account the interests of all of itsstakeholders.

Oando Plc believes that full disclosure and transparency in itsoperations are in the interests of good governance. As indi-cated in the statement of responsibilities of directors and notesto the accounts, the business adopts standard accountingpractices and ensures sound internal controls to facilitate thereliability of the financial statements.

Statement of Directors’Responsibilities31 December 2010

The Board of DirectorsThe Board is responsible for setting the Company’s strategic direc-tion, for leading and controlling the Company and for monitoringactivities of the executive management. The Board presents a bal-anced and understandable assessment of the Company’s progressand prospects.

The Board consists of the Chairman, five non-executive directorsand four executive directors. The non-executive directors haveexperience and knowledge of the industry, markets, financial and/or other business information to make a valuable contribution to theCompany’s progress. The Managing Director is a separate indi-vidual from the Chairman and he implements the management strat-egies and policies adopted by the Board. They meet at least fourtimes a year.

The Audit CommitteeThe Audit Committee (the “Committee”) is made up of six members- three directors (all of whom are non-executive) and three share-holders. The Committee members meet at least thrice a year.

The Committee’s duties include keeping under review the scopeand results of the external audit, as well as the independence andobjectivity of the auditors. The Committee also keeps under reviewthe risk and controls over financial reporting, compliance with lawsand regulations and the safeguarding of assets. In addition, theCommittee reviews the adequacy of the Internal Audit plan andimplementation status of Internal Audit recommendations.

Systems of Internal ControlOando Plc has well-established internal control system for identify-ing, managing and monitoring risks. The Risk and Controls Man-agement and Internal Audit functions have reporting responsibili-ties to the Audit Committee. Both functions have suitable personnelthat undergo trainings on current business issues and best prac-tices.

Code of Business Conduct and EthicsManagement has communicated the principles in the Company’sCode of Business Conduct and Ethics to its employees in the dis-charge of their duties. This Code sets the professionalism andintegrity required for business operations which covers compli-ance with the law, conflicts of interest, environmental issues, reli-ability of financial reporting, bribery and strict adherence to theprinciples so as to eliminate the potential for illegal practices.

Director Director30 March, 2011 30 March, 2011


REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF OANDO PLC

Report on the financial statements

We have audited the accompanying financial statements of Oando PLC (the Company) and its subsidiaries (together “the group”) whichcomprise the balance sheet as of 31, December 2010 and the profit and loss account, and statement of cash flows for the year thenended and a summary of significant accounting policies and other explanatory notes.

Directors’ responsibility for the financial statements

The directors are responsible for the preparation and fair presentation of these financial statements in accordance with NigerianStatements of Accounting Standards and with the requirements of the Companies and Allied Matters Act and for such internal control, asthe directors determine necessary to enable the preparation of financial statements that are free from material misstatements, whetherdue to fraud or error.

Auditor’s responsibility

Our responsibility is to express an independent opinion on the financial statements based on our audit. We conducted our audit incompliance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan andperform our audit to obtain reasonable assurance that the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risks assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by thedirectors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropraiate to provide a basis for our opinion.

Opinion

In our opinion the accompanying financial statements give a true and fair view of the state of the Company and Group’s financial affairsat 31 December 2010 and of their profit and cash flows for the year then ended in accordance with Nigerian Statements of AccountingStandards and the Companies and Allied Matters Act.

Report on other legal requirements

The Companies and Allied Matters Act requires that in carrying out our audit we consider and report to you on the following matters. Weconfirm that:I. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the

purposes of our audit;II. in our opinion proper books of account have been kept by the company, so far as appears from our examination of those books;III. the company’s balance sheet and profit and loss account are in agreement with the books of account.

Chartered AccountantsLagos, Nigeria


31-Dec-10 31-Dec-09NOTE Group Company Group Company

Non-current assetsProperty, plant and equipment 4 152,513,387 10,581,664 131,713,072 8,910,979Intangible assets 5 23,806,605 298,667 23,969,748 448,000Long-term investments 6 1,000 41,340,432 1,000 39,471,680Deferred tax asset 13 3,695,549 166,895 2,161,298 244,050Long-term receivables 7 25,492,756 1,854,462 18,783,390 7,380

205,509,297 54,242,120 176,628,508 49,082,089Current assetsInventories 8 22,386,418 4,361 9,693,311 41,476Debtors and prepayments 9 80,240,118 457,692,118 96,743,166 342,880,157Deferred tax asset 13 5,663,203 - 6,922,654 -Bank and cash balances 12,187,072 815,762 25,760,410 13,459,918

120,476,811 458,512,241 139,119,541 356,381,551Current liabilitiesCreditors and accruals 10 60,467,691 395,267,049 81,398,265 288,826,506Dividend payable 651,358 651,358 50,123 50,123Deferred tax liability 13 22,252 13,755 923,737 217,691Current income tax liabilities 26b 5,521,737 1,064,907 3,313,947 586,360Borrowings 11 71,020,640 6,067,078 140,473,551 80,263,640

137,683,678 403,064,147 226,159,623 369,944,320Net current (liabilities)/assets (17,206,867) 55,448,094 (87,040,082) (13,562,769)

Non-current liabilitiesBorrowings 11 76,348,834 51,000,000 21,247,128 -Other non-current liabilities 12 1,188,783 - 1,168,808 -Deferred tax liability 13 12,424,655 192,425 11,928,511 311,885Provision for other liabilities & charges 14 3,147,892 476,893 2,432,237 127,591

93,110,164 51,669,318 36,776,684 439,476

Net Assets 95,192,266 58,020,896 52,811,742 35,079,844Capital and reserves attributable to equity holdersShare capital 15 905,084 905,084 452,542 452,542Share premium account 16 49,042,111 49,042,111 29,735,182 29,735,182Revaluation reserve 17 18,120,080 1,013,047 7,215,257 217,242Retained earnings 18 26,022,475 7,060,654 14,401,178 4,674,878

94,089,750 58,020,896 51,804,159 35,079,844Minority interest 19 1,102,516 - 1,007,583 -Total equity 95,192,266 58,020,896 52,811,742 35,079,844

The financial statements on pages 62 to 90 were approved by the Board of Directors on 30 March, 2011 and signed on its behalf by:

DIRECTORS:

The accounting policies on pages 65 to 69 and notes on pages 69 to 87 form an integral part of these financial statements.

Balance SheetAs of 31 December 2010

N’000



Turnover 20 378,925,430 4,352,005 336,859,678 4,207,854Cost of sales (324,797,391) - (301,282,506) -Gross profit 54,128,039 4,352,005 35,577,172 4,207,854Selling and marketing costs (7,220,296) - (7,435,802) -Administrative expenses 21 (22,484,703) (1,882,531) (18,087,443) (1,466,900)Interest received 22 1,468,674 3,692,764 3,570,953 4,921,350Other operating income 23 4,174,589 322,420 11,713,165 1,381,757Operating profit 30,066,303 6,484,658 25,338,045 9,044,061Interest payable and similar charges 24 (5,747,458) (806,108) (11,825,890) (4,222,749)Profit before taxation 25 24,318,845 5,678,550 13,512,155 4,821,312Taxation 26a (9,943,879) (275,826) (3,415,176) (159,952)Profit after taxation 14,374,966 5,402,724 10,096,979 4,661,360

Attributable to:Equity holders of the company 18 14,379,066 5,402,724 10,243,168 4,661,360Minority interests 19 (4,100) - (146,189) -

14,374,966 5,402,724 10,096,979 4,661,360

Earnings per share for profit attributable toequity holders of the Company during the year:Basic earnings per share (kobo) 27 829 311 1,132 515


Profit and Loss AccountFor the year ended 31 December 2010

N’000



Cash flows from operating activitiesNet cash flow from operating activities beforechanges in working capital

28 37,728,245 3,039,993 28,093,325 4,479,314Net (decrease)/increase in working capital 29 (19,303,810) (9,856,725) 35,698,352 (7,505,840)Income tax paid 26 (7,806,099) (156,082) (5,628,467) (187,106)Net cash from/(used in) operating activities 10,618,336 (6,972,814) 58,163,210 (3,213,632)

Cash flows from investing activitiesPurchase of property plant and equipment 4 (18,745,614) (1,104,311) (38,157,748) (7,411,042)Investment in subsidiaries - (1,868,752) - (7,344,126)Acquisition of subsidiary - - (6,960,390) -Payments relating to pipeline construction 7 (8,615,464) - (6,744,918) -Pipeline construction costs recovery 7 3,753,789 - 2,796,583 -Proceeds from sale of property, plant and equipment 318,655 267,868 450,955 68,220Signature bonus refunded - - 23,735,950 -Interest received 1,468,674 3,692,764 3,570,953 4,921,350Cash (used in)/from investing activities (21,819,960) 987,569 (21,308,615) (9,765,598)

Cash flows from financing activitiesProceeds from long-term loans 74,748,659 60,000,000 20,729,492 -Repayment of long-term loans (15,715,642) (3,000,000) (38,322,707) (27,735,904)Proceed from import finance facilities 9,142,843 - 19,318,100 -Share issue expenses 16 (1,660,865) (1,660,865) - -Repayment of finance lease (111,429) - (2,620) (79,601)Proceeds from other short term loans 16,486,606 3,200,868 - -Repayment of other short term loans (93,947,807) (83,042,271) (50,716,463) 33,968,441Increase/(decrease) in bank overdrafts (4,878,560) (355,159) 3,865,712 378,811Dividend paid (2,114,019) (2,114,017) (2,664,265) (2,664,265)Issue of shares 21,118,641 21,118,641 18,412 18,412Interest paid (5,652,290) (806,108) (11,746,003) (4,222,749)Net cash used in financing activities (2,583,863) (6,658,911) (59,520,342) (336,855)

Net change in cash and cash equivalents (13,785,487) (12,644,156) (22,665,747) (13,316,085)Cash and cash equivalent at the beginning of the year 25,760,411 13,459,918 48,981,689 26,776,003Exchange difference 212,148 - (555,531) -Cash and cash equivalents at end of the year 12,187,072 815,762 25,760,411 13,459,918

Cash at year end is analysed as follows:Cash at bank and in hand 9,209,746 355,517 7,103,932 1,344,955Fixed deposits 2,977,326 460,245 18,656,479 12,114,963

12,187,072 815,762 25,760,411 13,459,918


Statement of Cash FlowsFor the year ended 31 December 2010

N’000


1. General informationOando Plc (formerly Unipetrol Nigeria Plc) was registered bya special resolution as a result of the acquisition of theshareholding of Esso Africa Incorporated (principalshareholder of Esso Standard Nigeria Limited) by the FederalGovernment of Nigeria. It was partially privatised in 1991 andfully privatised in the year 2000 following the disposal of the40% shareholding of Federal Government of Nigeria to Oceanand Oil Investments Limited and the Nigerian public. InDecember 2002, the Company merged with Agip Nigeria Plcfollowing its acquisition of 60% of Agip Petroli’s stake in AgipNigeria Plc. The Company formally changed its name fromUnipetrol Nigeria Plc to Oando Plc in December 2003.

Oando Plc (the “Company”) is listed on the Nigerian StockExchange. The Company has a subsidiary called OandoMarketing Limited with retail and distribution outlets in Nigeria,Ghana and Togo and other smaller markets along the WestAfrican coast. During the year, Oando Marketing Limited, asubsidiary of Oando Plc, changed its name to Oando MarketingPlc in preparation for a divestment that is planned for 2011. Asof 31 December 2010, Oando Plc has 100% interest in OandoMarketing Plc, Oando Trading (Bermuda) and Oando Supplyand Trading (Nigeria). These entities mainly supply petroleumproducts to marketing companies and large industrialcustomers.

The Group provides energy services to Exploration andProduction (E&P) companies through its fully owned subsidiary,Oando Energy Services. The Group also operates in the E&Psector through Oando Exploration and Production Limited(100%), Oando Production and Development Company Limited(95%), Oando OML 125 & 134 Limited, Equator ExplorationLimited (78.1%) and Oando Akepo Limited (100%). Othersubsidiaries within the Group and their respective lines ofbusiness including Gas and Power, are shown in note 36.

2. Statement of significant accounting policies2.1 Basis of preparation

The financial statements are prepared in compliance with theStatements of Accounting Standards (SAS). The financialstatements are presented in the functional currency, NigeriaNaira (N), rounded to the nearest thousand, and preparedunder the historical cost convention as modified by therevaluation of certain property, plant and equipment.

The preparation of financial statements in conformity withgenerally accepted accounting principles requires the use ofestimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assetsand liabilities at the date of the financial statements and thereported amounts of revenues and expenses during thereporting period. Although these estimates are based on theDirectors’ best knowledge of current events and actions, actualresults ultimately may differ from those estimates.

Statement of Significant Accounting Policies31 December 2010

2.2 Consolidation(a) SubsidiariesSubsidiaries include all entities (including special purposeentities) over which the Group has the power to govern thefinancial and operating policies generally accompanying ashareholding of more than one half of the voting rights. Theexistence and effect of potential voting rights that are currentlyexercisable or convertible are considered when assessingwhether the Group controls another entity. Subsidiaries arefully consolidated from the date on which control is transferredto the Group. They are de-consolidated from the date thatcontrol ceases.

The purchase method of accounting is used to account for theacquisition of subsidiaries by the Group. The cost of theacquisition is measured as the fair value of the assets given,equity instruments issued and liabilities incurred or assumedat the date of exchange plus costs directly attributable to theacquisition. Identifiable assets acquired and liabilities andcontingent liabilities assumed in a business combination aremeasured initially at their fair values at the acquisition dateirrespective of the extent of any minority interest. The excessof the cost of acquisition over the fair value of the Group’sshare of the identifiable net assets acquired is recorded asgoodwill. If the cost of acquisition is less than the fair value ofthe net assets of the subsidiary acquired, after reassessmentby the Group, the difference is recognised immediately in theprofit and loss account any excess remaining after thatreassessment.

All balances and unrealised surpluses and deficits ontransactions between Group companies have been eliminated.Where necessary, accounting policies for subsidiaries arechanged to ensure consistency with the policies adopted bythe Company. Separate disclosure (in equity) is made ofMinority Interests.

(b) AssociatesAssociates are all entities over which the Group has significantinfluence but not control, generally accompanying ashareholding of between 20% and 50% of the voting rights.Investments in associates are accounted for by the equitymethod of accounting and are initially recognised at cost. TheGroup’s investment in associates includes goodwill (net ofany accumulated impairment loss) identified on acquisition.

The Group’s share of its associates’ post-acquisition profitsor losses is recognised in the income statement, and its shareof post-acquisition movements in reserves is recognised inreserves. The cumulative post-acquisition movements areadjusted against the carrying amount of the investment. Whenthe Group’s share of losses in an associate equals or exceedsits interest in the associate, including any other unsecuredreceivables, the Group does not recognise further losses,unless it has incurred obligations or made payments on behalfof the associate. Unrealised gains on transactions betweenthe Group and its associates are eliminated to the extent of


the Group’s interest in the associates. Unrealised losses arealso eliminated unless the transaction provides evidence ofan impairment of the asset transferred.The accounting policies of the associates are consistent withthe policies adopted by the Group.

All subsidiaries and associates have uniform accountingperiod.

2.3 Segment reportingA business segment is a group of assets and operationsengaged in providing products or services that are subject torisks and returns that are different from those of other businesssegments. A geographical segment is engaged in providingproducts or services within a particular economic environmentthat are subject to risks and returns that are different fromthose of segments operating in other economic environments.

2.4 Foreign currency translation(a) Transactions and balancesTransactions in foreign currencies during the year areconverted into the functional currency, Nigeria Naira, usingthe exchange rates prevailing at the dates of the transactions.Foreign exchange gains and losses resulting from thesettlement of such transactions and from the translation atyear-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the profitand loss account.

(b) Group companiesIn accordance with the Statement of Accounting Standard(SAS 7), the financial statements of foreign entities, prior toconsolidation, are translated into Naira using the Closing RateMethod as follows:

(a) assets and liabilities, both monetary and non-monetaryare translated at the closing rate;(b) income statement itemsare translated at the closing rate; (c) the exchange differencesresulting from translating the opening net investment in theforeign entity at an exchange rate different from that at whichit was previously reported is taken to a Capital ReserveAccount.

2.5 Property, Plant and EquipmentAll categories of property, plant and equipment are initiallyrecorded at cost. Buildings and freehold land are subsequentlyshown at market value, based on triennial valuations byexternal independent valuers, less subsequent depreciationfor buildings. All other property, plant and equipment are statedat historical cost less depreciation.

Subsequent costs are included in the asset’s carrying amountor recognised as a separate asset, as appropriate, only whenit is probable that future economic benefits associated withthe item will flow to the Company and the cost of the item canbe measured reliably. All other repairs and maintenance arecharged to the profit and loss account during the financialperiod in which they are incurred.Increases in the carrying amount arising on revaluation of


land and buildings are credited to revaluation reserve inshareholders’ equity. Decreases that offset previous increasesof the same asset are charged against fair value reservesdirectly in equity; all other decreases are charged to the incomestatement. An asset’s carrying amount is written downimmediately to its recoverable amount if the it is greater thanits estimated recoverable amount.Gains or losses on disposals are determined by comparingproceeds with carrying amounts. These are included in theincome statement. When revalued assets are sold, the relatedrevaluation reserves are transferred to income statement.

DepreciationDepreciation is calculated using the straight-line method toallocate their cost or revalued amounts to their residual valuesover their estimated useful lives, as follows:

%Building 2 - 5Bulk Plants, Terminal, Plant and Machinery 5 - 121/2

Motor Vehicles 20 - 25Other Assets and Equipment 5 - 331/3

2.6 Upstream activitiesExploratory drilling costs are included in property, plant andequipment pending determination of proved reserves. Followingsuch determination, the capitalised costs are then amortisedagainst the results of the successful finds on a “unit-of-production” basis. Capitalised costs are written off when it isdetermined that the well is dry. Costs incurred in the productionof crude oil from the Company’s properties are charged to theincome statement of the period in which they are incurred.

Tangible fixed assets related to oil and gas producing activitiesare depleted on a unit-of-production basis over the proveddeveloped reserves of the field concerned except in the caseof assets whose useful lives are shorter than the lifetime ofthe field, in which case the straight-line method is applied.Producible wells are not depleted until they form part of aproducing field. Rights and concessions are depleted on theunit-of-production basis over the total proved reserves of therelevant area.

Estimated site restoration and abandonment costs are basedon current requirements, technology and price levels and arestated at fair value. The associated asset retirement costs arecapitalized as part of the carrying amount of the related tangiblefixed assets. The fair value calculation of the liability is basedon the economic life of the production assets and discountedusing the Company’s average cost of borrowing. The obligationis reflected under provisions in the balance sheet.

2.7 Intangible assets(a) GoodwillGoodwill represents the excess of the cost of an acquisitionover the fair value of the Group’s share of the net identifiableassets of the acquired subsidiary/associate at the date ofacquisition.


Goodwill on acquisition of subsidiaries is included in intangibleassets. Goodwill on acquisition of associates is included ininvestments in associates. Goodwill is tested annually forimpairment and carried at cost less accumulated impairmentlosses. Gains and losses on the disposal of an entity includethe carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purposeof impairment testing. Each of those cash-generating unitsrepresents the Group’s investment in each country of operationby each primary reporting segment.

In accordance with SAS 26, goodwill is tested for impairmentannually, as well as when there are indications of impairment.

(b) Computer softwareAcquired computer software licenses are capitalised on thebasis of the costs to acquire and bring to use the specificsoftware. These costs are amortised over their estimateduseful lives.

Costs associated with maintaining computer softwareprogrammes are recognised as an expense as incurred.Expenditure on internally-developed software is capitalised ifit meets the criteria for capitalising development costs. Directcosts include the software development, employee costs andan appropriate portion of relevant overheads. Computersoftware development costs recognised as assets areamortised over their estimated useful lives (not exceedingfive years).

2.8 Long-term receivable - pipeline cost recoveryLong-term receivable in respect of pipeline cost recovery isaccounted for at cost, less provision for impairment. Provisionfor impairment of the long-term receivable is established whenthere is objective evidence that the Group will not be able tocollect all amounts due according to the original terms of thereceivable.

2.9 Impairment of assetsAssets are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying amountsmay not be recoverable. An impairment loss is recognised forthe amount by which the asset’s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher ofan asset’s fair value less costs to sell and value in use. For thepurposes of assessing impairment, assets are grouped at thelowest levels for which there are separately identifiable cashflows (cash-generating units).

2.10 InventoriesInventories are stated at lower of cost and net realisable value.Cost includes expenditure incurred in acquiring and transportingthe inventory to its present location. Cost is determined usingthe weighted average method for finished goods and work-in-progress, raw materials, direct labour, other direct costs andrelated production overheads (based on normal operatingcapacity). It excludes borrowing costs. Net realisable value is

the estimated selling price in the ordinary course of business,less applicable variable selling expenses.

2.11 Trade receivablesTrade receivables are stated after provisions have been madefor debts considered doubtful of recovery. A provision forimpairment of trade receivables is established when there isobjective evidence that the Group will not be able to collect allamounts due according to the original terms of the receivables.The amount of the provision is recognised in the incomestatement.

2.12 Cash and cash equivalentsCash and cash equivalents include cash in hand, depositsheld at call with banks and other short-term highly liquidinvestments with original maturities of three months or less.

2.13 BorrowingsBorrowing costs are recognised as an expense in the periodin which they are incurred, except when they are directlyattributable to the acquisition, construction or production of aqualifying asset.

2.14 Deferred income taxDeferred income taxes are provided in full, using the liabilitymethod, on temporary differences arising between the taxbases of assets and liabilities and their carrying amounts inthe consolidated financial statements. However, if a deferredincome tax arises from initial recognition of an asset or aliability in a transaction other than a business combination thatat the time of the transaction affects neither accounting nortaxable profit or loss, such a deferred income tax is notaccounted for. Deferred income tax is determined using taxrates (and laws) that have been enacted or substantivelyenacted by the balance sheet date and are expected to applywhen the related deferred income tax asset is realised or thedeferred income tax liability is settled.

Deferred income tax assets are recognised to the extent thatit is probable that future taxable profit will be available againstwhich the temporary differences can be utilised.

Deferred income tax is not provided on temporary differencesarising on investments in subsidiaries and associates, as thetiming of the reversal of the temporary difference is controlledby the Group and it is probable that the temporary differencewill not reverse in the foreseeable future. Where this ceasesto be the case, deferred income tax will be provided for.

2.15 Employee benefitsThe Group operates a defined contribution pension plan in linewith the provisions of the Pension Reform Act, under whichthe Group pays fixed contributions into a separate entity. TheGroup has no legal or constructive obligations to pay furthercontributions if the fund does not hold sufficient assets to payall employees the benefits relating to employee service in thecurrent and prior periods.

The assets of all schemes are held in separate trusteeadministered funds, which are funded by contributions from



both the Group and employees.The Group’s contributions tothe defined contribution schemes are charged to the profitand loss account in the year to which they relate.

In addition, the Group operates a defined benefit servicegratuity plan. Under the plan, an employee will receive gratuityon retirement, usually dependent on one or more factors suchas years of service and compensation. The past service liability,actuarial gain or loss are determined by an Actuary using theAccrued benefit cost method. Actuarial gains or losses arerecognised in the profit and loss account in the year to whichthey relate. The Group meets past service obligations fromfunds set aside and invested.

2.16 ProvisionsIn accordance with SAS 23, provisions for environmentalrestoration, restructuring costs and legal claims arerecognised when: the Group has a present legal or constructiveobligation as a result of past events; it is more likely than notthat an outflow of resources will be required to settle theobligation; and the amount has been reliably estimated.Restructuring provisions comprise lease termination penaltiesand employee termination payments. Provisions are notrecognised for future operating losses.

Where there are a number of similar obligations, the likelihoodthat an outflow will be required in settlement is determined byconsideration of the class of obligations as a whole. A provisionis recognised even if the likelihood of an outflow with respectto any one item included in the same class of obligations maybe small.

Provisions are measured at the present value of management’sbest estimate of the expenditure required to settle the presentobligation at the balance sheet date. The discount rate used todetermine the present value reflects current marketassessments of the time value of money.

Decommissioning liabilitiesProvision is recognised for the decommissioning liabilities forunderground tanks. Based on management’s estimation of thefuture cash flows required for the decommissioning of thoseassets, a provision is recognised and the correspondingamount added to the cost of the asset under property plantand equipment. The present values are determined using theCompany’s average cost of borrowing. Subsequentdepreciation charges of the asset are accounted for inaccordance with the Group’s depreciation policy and theaccretion of discount (i.e. the increase during the period in thediscounted amount of provision arising from the passage oftime) included in finance costs.

2.17 Share capitalOrdinary shares are classified as equity. Incidental costsdirectly attributable to the issue of new shares or options areshown in equity as a deduction, net of tax, from the proceeds.

2.18 Revenue recognitionRevenue comprises the fair value of the sale of goods andservices, net of value-added tax, rebates and discounts andafter eliminating sales within the Group.

Discounts are usually negotiated with commercial customersand are sometimes given on a transaction basis or fixed percustomer, subject to subsequent reviews.

Revenue is recognised as follows:(a) Sale of productsRevenue from sale of petroleum products and gas isrecognised when a Group entity has delivered products to thecustomer, the customer has accepted the products andcollectability of the related receivables is reasonably assured.

(b) Sale of servicesRevenue from sale of services, such as freight and through-put charges, is recognised in the accounting period in whichthe services are rendered, by reference to completion of thespecific transaction assessed on the basis of the actualservice provided as a proportion of the total services to beprovided.

(c) Dividend incomeDividend income is recognised when the right to receivepayment is established.

(d) Interest incomeInterest income is recognised on a time proportion basis usingthe contracted interest rate.

2.19 LeasesOperating leasesLeases in which a significant portion of the risks and rewardsof ownership are retained by the lessor are classified asoperating leases. Payments made under operating leases (netof any incentives received from the lessor) are charged to theincome statement on a straight-line basis over the period ofthe lease.

Finance leasesLeases in which ownership, risks and rewards are transferredto the lessee, who is obligated to pay such costs as insurance,maintenance and similar charges on the asset are classifiedas finance leases. Assets under finance lease are capitalisedand depreciated over their estimated useful lives in line withthe Group’s policy for assets of the same class. Financecharges are allocated over the lease term.

2.20 Dividend distributionDividend distribution to the Company’s shareholders isrecognised as a liability in the consolidated financial statementsin the period in which the dividends are approved by theshareholders.

2.21 Long-term investmentsInvestment in quoted and unquoted securities are stated net



of provision for permanent diminution in carrying amounts. Apermanent diminution is deemed to have occurred when themarket values of the quoted securities and management’sassessments of unquoted investments are significantly belowthe carrying amounts over a period of six months . The amountof provision is recognised in the income statement.

3. Segment information3.1 Primary reporting format - business segments

The Group is broadly organised on a worldwide basis intoseven main segments as follows:

(i) Exploration and production of oil and gas (E&P)This segment involves the exploration for and production of oiland gas through the acquisition of rights in oil blocks on theNigerian continental shelf and deep offshore.

(ii) Marketing of petroleum productsThis segment involves marketing and sale of petroleumproducts.

(iii) Supply and tradingThis involves bulk purchase of petroleum products and salesto industrial and commercial customers and petroleum

products’ importation on behalf of Government.

(iv) Refining and terminalsThe Group has three principal projects: construction of210,000 MT import terminal in Lekki; construction of LPGstorage facility at Apapa Terminal; and construction of a marinajetty and subsea pipeline at the Lagos Port.

(v) Gas and powerThe Group through the activities of its subsidiaries, Gaslinkand East Horizon Gas Company, is involved in the distributionof natural gas. The Group also provides power to industrialcustomers through Akute Power Limited and Oando Gas andPower.

(vi) Energy servicesThis segment involves the provision of services such as drillingand completion fluids and solid control waste management;oil-well cementing and other services to upstream companies.

(vii) Corporate & OtherThese include Company activities that cannot be directlyallocated to any of the above segments.

The segment results for the year ended 31 December 2010 are as follows:

Exploration & Marketing Supply & Refining & Gas & Energy Corporate GroupProduction Trading Terminals Power Services & Other

Total gross segment sales 19,494,444 171,016,862 184,357,785 - 16,733,982 14,193,375 - 405,796,448Inter-segment sales - - (26,871,018) - - - - (26,871,018)Sales 19,494,444 171,016,862 157,486,767 - 16,733,982 14,193,375 - 378,925,430Depreciation 2,517,998 1,509,113 37,409 - 341,749 1,956,882 326,858 6,690,009Amortisation - - 13,267 - - - 149,333 162,600Operating profit/(loss) 9,761,255 6,686,981 5,187,571 (2,614) 4,814,680 4,927,666 (1,309,236) 30,066,303Finance cost (85,661) (1,022,751) (188,141) - (606,471) (3,169,124) (675,311) (5,747,458)Profit before income tax 24,318,845Taxation (9,943,879)Profit for the year 14,374,966

The segment results for the year ended 31 December 2009 are as follows: N’000


Total gross segment sales 12,221,383 163,324,178 192,415,924 - 10,455,445 6,076,108 - 384,493,038Inter-segment sales - - (47,633,360) - - - - (47,633,360)Sales 12,221,383 163,324,178 144,782,564 - 10,455,445 6,076,108 - 336,859,678Depreciation 3,463,719 1,448,107 20,277 - 29,589 533,991 274,779 5,770,462Amortisation - - 13,223 - - - 145,377 158,600Operating (loss)/profit 8,079,485 5,843,440 5,815,274 - 995,522 1,127,444 3,476,880 25,338,045Finance cost (2,805,638) (1,033,289) (2,581,572) - (110,778) (1,071,864) (4,222,749) (11,825,890)Profit before income tax 13,512,155Taxation (3,415,176)Profit for the year 10,096,979

Inter-segment revenue represents sales between the Supply and Trading and Marketing segments. Inter-segment transactions areentered into under the normal commercial terms and conditions that would also be available to unrelated third parties. Profit on inter-segment sales have been eliminated on consolidation.

Notes to the Financial Statements31 December 2010

N’000


The segment assets and liabilities as of 31 December 2010 and capital expenditure for the year then ended are as follows:

Exploration & Marketing Supply & Refining & Gas & Energy Corporate GroupProduction Trading Terminals Power Services & Others

Assets 104,344,384 63,734,427 43,220,692 3,056,572 37,901,543 45,690,098 18,679,638 316,627,354Liabilities 18,771,162 44,403,226 49,074,434 - 32,461,400 7,068,255 61,046,721 212,825,198Capital Expenditure* 12,148,155 880,258 50,944 214,370 680,340 3,599,926 1,171,621 18,745,614

The segment assets and liabilities as of 31 December 2009 and capital expenditure for the year then ended are as follows:


Assets 102,358,041 60,514,654 44,643,388 2,835,446 33,384,843 44,434,878 18,492,847 306,664,097Liabilities 20,879,064 47,792,182 52,227,907 - 28,884,382 13,003,838 83,257,909 246,045,282Capital Expenditure 13,970,136 1,199,139 19,516 1,835,533 1,502,103 12,224,656 7,406,665 38,157,748

Segment assets consist primarily of property, plant and equipment, intangible assets, investments, inventories, receivables andoperating cash. They exclude deferred taxation.

Segment liabilities comprise operating liabilities. They exclude corporate and deferred taxation.

*Capital expenditure comprises additions to property, plant and equipment.

3.2 Secondary reporting format - geographical segmentsThe Group’s business segments operate in three main geographical areas.

The home country of the Company which, is also the main operating company, is Nigeria. The Group’s sales are mainly in Nigeriaand other countries within and outside the West African coast, namely, Ghana, Togo, and Liberia. ‘Other countries’ include Bermudaand the British Virgin Island.

Segment information on a geographical basis for the year ended 31 December 2010 are as follows:


SalesWithin Nigeria 19,494,444 161,943,112 71,413,414 - 16,733,982 14,193,375 - 283,778,327Other West Africancountries - 9,073,750 23,263 - - - - 9,097,013Other countries - - 86,050,090 - - - - 86,050,090

19,494,444 171,016,862 157,486,767 - 16,733,982 14,193,375 - 378,925,430Total assetsWithin Nigeria 100,215,343 57,194,061 29,604,219 3,056,572 37,901,543 45,690,098 18,679,638 292,341,474Other West Africancountries - 6,540,366 51,543 - - - - 6,591,909Other countries 4,129,042 - 13,564,930 - - - - 17,693,972

104,344,385 63,734,427 43,220,692 3,056,572 37,901,543 45,690,098 18,679,638 316,627,355Capital expenditureWithin Nigeria 12,023,718 815,842 50,944 214,370 680,340 3,599,925 1,171,622 18,556,761Other West Africancountries - 64,416 - - - - - 64,416Other countries 124,437 - - - - - - 124,437

12,148,155 880,258 50,944 214,370 680,340 3,599,925 1,171,622 18,745,614


Primary reporting format - business segements (continued)N’000


Segment information on a geographical basis for the year ended and as at 31 December 2009 are as follows:


SalesWithin Nigeria 12,221,383 154,611,799 61,100,077 - 10,455,445 6,076,108 - 244,464,812Other West Africancountries - 8,712,379 - - - - - 8,712,379Other countries - - 83,682,487 - - - - 83,682,487

12,221,383 163,324,178 144,782,564 - 10,455,445 6,076,108 - 336,859,678Total assetsWithin Nigeria 99,332,242 58,534,868 25,945,115 2,835,446 33,384,843 44,434,878 18,492,848 282,960,240Other West Africancountries 3,025,800 1,979,785 - - - - - 5,005,585Other countries - - 18,698,273 - - - - 18,698,273

102,358,042 60,514,653 44,643,388 2,835,446 33,384,843 44,434,878 18,492,848 306,664,098Capital expenditureWithin Nigeria 13,970,136 1,113,541 19,516 1,835,533 1,502,103 12,224,656 7,406,665 38,072,150Other West Africancountries - 85,598 - - - - - 85,598Other countries - - - - - - - -

13,970,136 1,199,139 19,516 1,835,533 1,502,103 12,224,656 7,406,665 38,157,748

Sales are disclosed based on the country in which the customer is located. Total assets are allocated based on where the assets arelocated.

Capital expenditure is allocated based on where the assets are located.

4 Property, plant and equipment4.1 Group

Fixtures,Upstream Land and Plant and Motor fittings, and Construction

Assets* buildings machinery vehicles equipment in progress TotalCost/ValuationAt 1 January 2010 71,371,138 16,590,962 18,972,919 1,738,401 3,265,723 32,876,932 144,816,075Transfer/reclassification 299,663 254,672 14,673,559 - 39,760(15,267,654) -Additions 12,085,548 122,858 1,986,994 417,485 224,949 3,907,780 18,745,614Revaluation surplus (Note 17) - 8,003,534 2,495,726 - - - 10,499,260Accumulated depreciation on revaluation - (1,581,123) (1,522,880) - - - (3,104,003)Impairment (Note 37.2) (1,399,431) - (312,779) - - - (1,712,210)Decommissioning asset addition - - 144,869 - - - 144,869Disposals - (280,025) (58,396) (134,121) (7,713) (1,715) (481,970)Exchange difference/Adjustments 1,238,266 (62,579) 180,363 2,509 23,409 (303,599) 1,078,369At 31 December 2010 83,595,184 23,048,299 36,560,375 2,024,274 3,546,128 21,211,744 169,986,004

DepreciationAt 1 January 2010 7,218,881 1,284,808 1,731,375 1,013,931 1,854,007 - 13,103,002Transfer/reclassification (9,275) 115 (31,324) 31 40,453 - -Charge for the year 2,525,529 564,449 2,833,587 358,921 407,523 - 6,690,009Accumulated depreciation on revaluation - (1,581,123) (1,522,880) - - - (3,104,003)Disposals - (51,701) (57,195) (90,870) (4,807) - (204,573)Exchange difference 943,432 (12,620) 36,070 (1,513) 22,813 - 988,182At 31 December 2010 10,678,567 203,928 2,989,633 1,280,500 2,319,989 - 17,472,617

Net book valueAt 31 December 2010 72,916,617 22,844,371 33,570,742 743,774 1,226,139 21,211,744 152,513,387At 31 December 2009 64,152,257 15,306,154 17,241,543 724,470 1,411,716 32,876,932 131,713,072


N’000


4.2 CompanyFixtures,

Upstream Land and Plant and Motor fittings, and ConstructionAssets* buildings machinery vehicles equipment in progress Total

Cost/ValuationAt 1 January 2010 - 549,401 52,858 573,591 780,802 7,746,756 9,703,408Transfer/reclassification - 274,392 6,073 - 1,753 (282,218) -Additions - 3,175 58,550 124,267 84,371 833,948 1,104,311Revaluation surplus (Note 17) - 1,125,608 - - - - 1,125,608Disposals - (265,025) - (32,070) - - (297,095)At 31 December 2010 - 1,687,551 117,481 665,788 866,926 8,298,486 11,636,232

DepreciationAt 1 January 2010 - 29,685 20,755 276,460 465,527 - 792,427On transfer/reclassification - - - - - - -Charge for the year - 20,078 6,197 134,959 165,723 - 326,957Disposals - (49,763) - (15,054) - - (64,817)At 31 December 2010 - - 26,952 396,365 631,250 - 1,054,567

Net book valueAt 31 December 2010 - 1,687,551 90,529 269,422 235,676 8,298,486 10,581,664At 31 December 2009 - 519,716 32,103 297,130 315,274 7,746,756 8,910,979

Property, plant and equipment include the following assets which were held under finance leases at year end:

Plant and MotorMachinery vehicles Total

Cost 836,708 478,893 1,315,601Accumulated depreciation (494,513) (430,827) (925,340)

342,195 48,066 390,261

Assets acquired under finance lease have been capitalised and depreciated in accordance with the requirements of the Statementof Accounting Standard No. 11. Depreciation charges for the year are included in administrative expenses.

4.3 RevaluationBuildings and freehold land and plant and machinery were revalued in 2010 by Ubosi & Eleh, independent valuers in line theCompany’s accounting policy on property, plant and equipment. Valuations were done on the basis of the open market value. Thebook values of the assets have been adjusted to the revaluation amounts and the resultant surpluses, net of deferred income tax,have been credited to the revaluation reserve in the balance sheet as shown in Note 17.

31-Dec-10 31-Dec-09Group Company Group Company

5 Intangible assetsGoodwill (Note 5.1) 23,484,623 - 23,483,905 -Software costs (Note 5.2) 321,982 298,667 485,843 448,000

23,806,605 298,667 23,969,748 448,000


5.1 GoodwillMovement in goodwill is analysed as follows:CostAt 1 January 23,483,905 - 21,706,057 -Additions 718 - 1,777,848 -At 31 December 23,484,623 - 23,483,905 -

In accordance with the Group’s accounting policy, goodwill is not amortised but individually tested annually for impairment.


N’000


Impairment testing of goodwill

Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the business segments. Impairment testswere conducted as at the balance sheet date based on value in use calculations. The calculations used cash flow projections basedon financial forecasts covering a five year-period. The discount rate used is the pre-tax interest rate that reflects the current marketassessment of the risks specific to the business segment.

Based on the impairment test, the carrying amount of goodwill is not higher than the recoverable value. Accordingly, no impairmentloss has been recognised.

5.2 Software costsIn accordance with the Group’s accounting policy, deferred software costs are amortised over 5years. Current year charge ofN162.6 million (2009: N158.6million) is included in other administrative expenses.

6 Long-term investments


Quoted shares 10,000 10,000 10,000 10,000Provision for diminution in value (9,000) (9,000) (9,000) (9,000)

1,000 1,000 1,000 1,000Unquoted sharesAt 1 January - 39,470,680 - 32,129,055Additions - 1,868,752 - 7,352,953Transfer to subsidiaries - - - (8,828)Provision for diminution in value - - - (2,500)Balance, at end of year - 41,339,432 - 39,470,680

Total investments 1,000 41,340,432 1,000 39,471,680


The carrying amount of investments transferred are analysed as follows:OML 125 & 134 BVI Limited - - - 6,328OML 125 & 134 Limited - - - 2,500

- - - 8,828


N’000



Analysis of the company’s unquoted investment is as follows:Akute Power Limited - 2,500 - 2,500Apapa SPM Limited - 19,125 - 19,125East Horizon Gas Co. Ltd. - 10,000 - 10,000Gaslink Nigeria Limited - 6,933,125 - 6,933,125Oando Energy Services Limited - 550,497 - 550,497Oando Exploration and Production Company Limited - 3,896,152 - 2,039,152Oando Gas and Power Limited - 1,000 - 1,000Oando Lekki Refinery Company Limited - 2,500 - 2,500Oando Marketing PLC - 15,573,051 - 15,573,051Oando Petroleum and Development Company Limited - 3,315,774 - 3,315,774Oando Port Harcourt Refinery Company Limited - 2,500 - 2,500Oando Properties Limited - 250 - 250Oando Supply and Trading Limited - 763,344 - 763,344Oando Trading Limited Bermuda - 2,894,333 - 2,894,333OES Integrity Limited (formerly OML 112 & 117 Limited) - 6,538 - 6,538Oando Akepo Limited - 2,500 - 2,500Oando Terminal and Logistics - 2,500 - 2,500Equator Exploration Limited - 7,347,953 - 7,347,953Oando Liberia - 6,538 - 6,538OES Teamwork Limited - - -OES Respect Limited - - -OES Passion Limited - 1,752 - -OES Professionalism Limited - 10,000 - -

- 41,341,932 - 39,473,180Provision for diminution in value - (2,500) - (2,500)

- 41,339,432 - 39,470,680

Provision for diminution in value is analysed as follows:

Oando Port Harcourt Refinery Company Limited - 2,500 - 2,500

31-Dec-10 31-Dec-097 Long-term receivables Group Company Group Company

Long term prepayment 2,565,539 1,854,462 717,848 7,380Pipeline Cost Recovery Account 22,927,217 - 18,065,542 -

25,492,756 1,854,462 18,783,390 7,380

Pipeline Cost Recovery Account (PCRA) represents accumulated costs incurred in respect of the design, project management,funding and construction of the pipeline infrastructure on behalf of the Nigerian Gas Company by Gaslink and East Horizon GasCompany, which are recoverable from gas sales over the duration of the Natural Gas Sale and Purchase Agreement (NGSPA). Thetenure of the respective NGSPA does not exceed 20 years.

The PCRA includes land and building construction costs, plant and equipment costs, work-in-progress, pipeline construction costs,project vehicle costs, interest on borrowings, bank charges and fees, pipeline insurance cost, project management and othercharges relevant to the pipeline construction such as legal and professional fees. This is stated at cost less amounts recovered fromgas purchases.


N’000


Movement in the PCRA is analysed as follows:31-Dec-10 31-Dec-09

Group Company Group CompanyAt 1 January 18,065,542 - 14,117,207 -Additions during the year 8,615,464 - 6,744,918 -Capital recovered during the year (3,753,789) - (2,796,583) -At 31 December 22,927,217 - 18,065,542 -

8 InventoriesFinished products 18,371,623 - 5,963,148 -Raw materials 1,089,582 - 2,330,126 -Materials inventory 599,251 - 486,861 -Products-in-transit 1,931,583 - 1,293,340 -Work-in-progress - - 13,853 -Spares and other consumables 876,396 9,842 41,476 41,476

22,868,435 9,842 10,128,804 41,476Provision for slow moving and obsolete inventories (482,017) (5,481) (435,493) -

22,386,418 4,361 9,693,311 41,476

9 Debtors and prepaymentsTrade debtors 43,791,730 - 49,775,898 -Bridging claims receivable 7,044,442 - 14,835,883 -Petroleum Support Fund 7,269,504 - 13,795,982 -Deposit for import 9,084,041 - 363,346 -Other debtors 11,150,737 5,460,502 16,130,450 1,378,244Amounts due from related companies - 451,644,388 - 341,283,509Prepayments 4,309,785 606,388 3,473,955 218,404

82,650,239 457,711,278 98,375,514 342,880,157Provision for doubtful trade and other receivables (2,410,121) (19,160) (1,632,348) -

80,240,118 457,692,118 96,743,166 342,880,157

10 Creditors and accrualsTrade creditors 25,786,570 - 38,014,075 -Other creditors 20,636,033 1,911,755 29,188,022 2,567,540Accruals 8,121,989 939,636 8,089,057 -Amounts due to related companies - 392,415,658 - 286,236,114Deferred income* 5,923,099 - 6,219,903 -As previously stated 60,467,691 395,267,049 81,511,057 288,803,654Reclassification to provision for other liabilities and charges (Note 14.2) - - (112,792) 22,852

60,467,691 395,267,049 81,398,265 288,826,506

* Included in deferred income is N4.3 billion (2009: N2.1 billion) thatrelates to billings for make-up (unutilised) gas invoiced to customersin line with the take or pay agreement.

11 Borrowings

CurrentBank overdrafts 23,621,408 23,652 28,499,968 378,811Import finance facilities 29,136,991 - 19,994,148 -Finance lease obligation (Note 11b) 52,938 - 164,367 -Other current loans 8,328,324 43,426 60,114,155 79,884,829Current portion of long-term loans 9,880,979 6,000,000 31,700,913 -

71,020,640 6,067,078 140,473,551 80,263,640Non-currentSyndicated/other project loans (Note 11c) 76,348,834 51,000,000 11,340,491 -Other non-current loan - - 9,906,637 -

76,348,834 51,000,000 21,247,128 -


N’000


11a Current borrowings are analysed as follows:

Loan type/Purpose Tenor/Interest Security Balancerate

Import finance facility to finance the purchase of 3 - 90 days Sales proceeds of products 29,136,991petroleum products for resale. Libor + 1.75 - 4% financed under the facilityCommercial papers to finance product allocation from 3 - 90 days Stock Hypothecation, cash andPPMC and importation of petroleum products Libor + 1.75 - 4% cheque collection from product sales 8,328,323Finance lease Assets financed 52,938Overdraft 3 - 365 days

12.5- 15.5% Corporate guarantee/ Securitytrust deed 23,621,408

61,139,661Current portion of non-current borrowings 9,880,979

71,020,640

11b Reconciliation of minimum lease payments to present value of lease obligation

Minimum lease Future Present valuepayment finance of obligation

chargesPeriod not later than one year 48,268 4,670 52,938Period later than one year and not later than five years - - -Period later than five years - -

48,268 4,670 52,938

11c Non-current borrowings are analysed as follows:Borrowing type /Purpose Tenor/Interest rate Security BalanceTerm Loan To finance OML 125&134 Libor + 6% Domiciliation of revenue account 6,207,318

Activities with SCBTerm Loan To finance OML 90 Activities 6.533% Derivates barrels of oil 2,973,400Syndicated loan Greater Lagos III gas pipeline 3 years/ 15% Pledge of assets being financed; 275,000

project for Gaslink Corporate Guarantee of Oando PlcTerm Loan East Horizon gas pipeline project 15.00% Pledge of assets being financed; 868,476

Corporate Guarantee of Oando PlcTerm loan Equity financing 12 months with roll- Corporate Guarantee of Oando Plc to 2,500,000

over option/18.25% pay interest charges, fixed depositof the same amount

Syndicated gas UNICEM gas pipeline project by East 7 years/16.2% Corporate Guarantee of Oando Plc 9,300,001project facility Horizon Company Limited and domiciliation of current account

of gas sales proceedsSyndicated gas UNICEM gas pipeline project by East 3 years/16.2% Corporate Guarantee of Oando Plc, 3,483,300project facility Horizon Company Limited Domiciliation of current account

of gas sales proceedsProject finance Akute IPP 6 years/14.5% Corporate Guarantee of Oando Plc 3,533,125facilityMedium Term Loan Medium Term Loan 5 years/Higher of Assets of Oando Plc and some 57,000,000

MPR+8% or subsidiariesNibor+5%

Term Loan Medium Term Loan by Oando Togo 9.00% Corporate Guarantee of Oando Plc 89,19386,229,813

Less current portion (9,880,979)76,348,834


N’000



N’000


12 Other non-current liabilitiesCustomers’ security deposits 1,188,783 - 1,168,808 -

Customer security deposits represent amounts deposited by dealers in respect of product supply, use of the Oando MarketingPLC’s equipment and retailing outlets. The deposits do not attract any interest and are refundable to the dealers less any amountsowed at the expiration of the dealership agreement.


13 Deferred taxationDeferred taxation - non-current assetAt 1 January 2,161,298 244,050 881,028 -Provision during the year (Note 26) 1,106,538 118,612 1,087,269 198,917On prior year adjustment for gratuity (Note 18) - - 217,449 45,133Reclassification 404,080 (195,767) - -Net under/(over) provision for taxes 23,633 - (24,448) -At 31 December 3,695,549 166,895 2,161,298 244,050

Deferred taxation - current assetAt 1 January 6,922,654 - 1,342,715 -Provision/(write back) during the year (Note 26) (1,095,834) - 5,516,752 -Reclassification (190,675) - - -Net under/(over) provision for taxes (11,805) - 63,187 - Exchange difference 38,863 - - -At 31 December 5,663,203 - 6,922,654 -

Deferred taxation - current liabilityAt 1 January 923,737 217,691 437,329 -Provision/(write back) during the year (Note 26) (834,499) (203,936) 486,408 217,691Reclassification (66,986) - - -At 31 December 22,252 13,755 923,737 217,691

Deferred taxation - non-current liabilityAt 1 January 11,928,511 311,885 7,482,796 910,683Provision/(write back) during the year (Note 26) 775,192 (36,254) 3,945,702 (18,774)Reclassification (197,218) (195,767) - -Revaluation surplus (Note 17) 1,049,926 112,561 - -Net under/(over) provision for taxes (1,188,850) - - -Exchange difference 57,094 - 500,013 -Transfer to Oando Marketing - - - (580,024)At 31 December 12,424,655 192,425 11,928,511 311,885

Deferred tax liability is as a result of accelerated capital allowances on existing property, plant and equipment. Deferred tax relatingto revaluation surplus is included in revaluation reserve within equity. Deferred tax asset is as a result of unrelieved tax losses andunrealised exchange losses.


14 Provision for other liabilities & chargesTank decommissioning/abandonment provision (Note 14.1) 1,841,431 - 1,594,613 -Provision for gratuity (Note 14.2) 1,306,461 476,893 837,624 127,591

3,147,892 476,893 2,432,237 127,59114.1 Tank decommissioning/abandonment provision:

Balance, beginning of year 1,594,613 - 1,236,917 -Additions/Valuation change 144,869 - 176,775 -Accretion discount 95,168 - 79,887 -Exchange difference 6,781 - 101,034 -

Balance, end of year 1,841,431 - 1,594,613 -


In accordance with the Group’s accounting policy, a provision is recognised in respect of underground tanks decommissioningobligation and upstream, at the present value of management’s best estimate of the expenditure required to settle the presentobligation at the balance sheet date. A corresponding amount is included under plant and machinery, and depreciated in accordancewith the policy.

31-Dec-10 31-Dec-0914.2 Provision for gratuity Group Company Group Company

Balance, beginning of year 837,624 127,591 - -Reclassification from Creditors and accruals (Note 10) - - 112,792 (22,852)Provision for the year (Note 30b) 610,311 377,148 - -Payment during the year (141,474) (27,846) - -Prior year adjustment (Note 18) - - 724,832 150,443Balance, end of year 1,306,461 476,893 837,624 127,591

The gratuity scheme (the “Scheme”) exists for qualified staff of the Group. A member of staff qualifies for the Scheme after three years inemployment. Alexander Forbes Consulting Actuaries Nigeria Limited performed an actuarial valuation of the past service liability, using theAccrued benefit cost method and determined the liability as N1.3billion as of 31 December, 2010. The additional provision for past serviceliability relating to prior years, amounting to N724.8 million for Group and N150.4 million for Company and the related deferred taxes ofN217.4 million and N45.1 million respectively have been adjusted in retained earnings as shown in Note 18.

Payments for gratuity disclosed above were met from funds set aside and invested.


15 Share capitalAuthorised:6,000,000,000 Ordinary shares of 50k each 3,000,000 3,000,000 1,000,000 1,000,000

Issued and fully paid:At beginning of the year905,084,628 Ordinary shares of 50k each 452,542 452,542 452,442 452,442

Additions:2010:301,694,876 ordinary shares of 50k each - Rights 150,847 150,847 - -2010: 603,389,752 ordinary shares of 50k each - Bonus 301,695 301,695 100 100At end of the year1,810,169,256 Ordinary shares of 50k each 905,084 905,084 452,542 452,542

16 Share premium accountAt beginning of the year 29,735,182 29,735,182 29,716,870 29,716,870Issue of shares 20,967,794 20,967,794 18,312 18,312Share issue cost (1,660,865) (1,660,865) - -At end of the year 49,042,111 49,042,111 29,735,182 29,735,182

17 Revaluation reserveAt beginning of the year (Note 4) 7,215,257 217,242 7,215,257 217,242Revaluation surplus during the year:- Land & building (Note 4.1 & 4.2) 8,003,534 1,125,608 - -- Plant & Machinery (Note 4.1) 2,495,726 - - -On disposal (217,242) (217,242) - -Deferred tax (Note 13) (1,049,926) (112,561) - -Under/over provision of deferred taxes 1,672,731 - - -At end of the year 18,120,080 1,013,047 7,215,257 217,242

Revaluation reserve is not available for redistribution to shareholders until realised through disposal of related assets.


N’000



18 Retained earningsAt beginning of the year 14,401,178 4,674,878 7,343,127 2,831,967Exchange difference 259,179 - 35,405 -Bonus issues (301,695) (301,695) - -Dividend:2008 final - - (2,713,139) (2,713,139)2009 final (2,715,253) (2,715,253) - -Profit for the year 14,379,066 5,402,724 10,243,168 4,661,360As previously stated 26,022,475 7,060,654 14,908,561 4,780,188Prior year adjustment (Note 14.2) - - (724,832) (150,443)Deferred tax thereon (Note 13) - - 217,449 45,133At end of the year 26,022,475 7,060,654 14,401,178 4,674,878

19 Minority interestMovement in minority interests during the year is as follows:At start of the year 1,007,583 151,037Exchange difference 99,033 (2,110)Minority interest from business combination - 1,004,845Minority interest in current year results (4,100) (146,189)At end of the year 1,102,516 1,007,583

20 TurnoverAnalysis by geographical regionWithin Nigeria 283,778,327 4,352,005 244,464,812 848,911Other West African Countries 9,097,013 - 8,712,379Other countries (Note 3.2) 86,050,090 - 83,682,487 3,358,943

378,925,430 4,352,005 336,859,678 4,207,854Analysis by product/typeCrude Oil 19,494,444 - 78,055,148 -Fuels 318,085,606 - 218,668,030 -Base oil, lubricants and other products 10,418,023 - 24,760,352 -Gas 16,733,982 - 11,031,485 -Barite, drill bits and oil well cement 2,018 - 383,664 -Non Fuel Revenue 14,191,357 - 104,196 -Intra-group dividend - 4,352,005 - 4,207,855Others - - 3,856,803 -

378,925,430 4,352,005 336,859,678 4,207,85521 Administrative expenses

Repairs and maintenance 737,192 4,073 339,862 32,828Insurance 258,930 69,583 45,239 -Rent and other hiring costs 694,692 82,474 1,478,348 298,573Depreciation 6,690,009 326,957 5,770,461 274,779Other administrative expenses 14,103,880 1,399,444 10,453,533 860,720

22,484,703 1,882,531 18,087,443 1,466,900

22 Interest receivedThis represents interest income accruing from placement of surplus cash in commercial banks for Group; and placement of surpluscash in commercial banks and intercompany interest for Company.


N’000



N’000

31-Dec-10 31-Dec-0923 Other operating income Group Company Group Company

Profit on sale of property plant and equipment 41,258 35,590 77,149 61,852Foreign exchange gain 1,387,538 281,785 1,965,345 1,319,327Income on debt purchase - - 7,714,303 -Other income 2,745,793 5,045 1,956,368 578

4,174,589 322,420 11,713,165 1,381,75724 Interest payable and similar charges

Interest on long term loan 957,568 - 3,460,197 -Interest on short term loans and overdrafts 4,694,722 806,108 8,285,806 4,222,749Total interest on bank loans and overdrafts 5,652,290 806,108 11,746,003 4,222,749Accretion charge 95,168 - 79,887 -

5,747,458 806,108 11,825,890 4,222,749

25 Profit before taxationProfit before taxation is stated after charging or crediting:- Depreciation, depletion and amortisation of upstream assets(Note 37.1) 2,525,529 - 3,463,719 -- Depreciation - others 4,164,480 326,957 2,306,743 274,779- Auditors’ remuneration 130,100 21,600 135,000 30,000- Directors’ remuneration 880,694 407,626 711,342 288,066- Foreign exchange loss 1,133,487 234,012 - -- Foreign exchange gain 1,387,538 281,785 1,965,346 1,319,327- Profit on sale of property plant and equipment 41,258 35,590 77,149 61,852

26 Taxation(a) Per profit & loss accountCharges for the yearIncome tax 9,229,384 594,964 5,226,530 153,966Education tax 784,505 39,664 360,557 5,986

10,013,889 634,628 5,587,087 159,952Deferred tax (Note 13)Deferred tax on non-current asset (1,106,538) (118,612) (1,087,269) (198,917)Deferred tax on current asset 1,095,834 - (5,516,752) -Deferred tax on current liability (834,499) (203,936) 486,408 217,691Deferred tax on non-current liability 775,192 (36,254) 3,945,702 (18,774)

9,943,878 275,826 3,415,176 159,952

(b) Per balance sheetBalance, 1 January 3,313,947 586,360 3,355,327 613,514Payments during the year (7,806,099) (156,082) (5,628,467) (187,106)Charge for the year 10,013,889 634,628 5,587,087 159,952Balance, 31 December 5,521,737 1,064,906 3,313,947 586,360

27 Earnings per shareBasic earnings per share is calculated by dividing the profit attributable to the equity holders of the Company by the weightedaverage number of shares in issue during the year.

31-Dec-10 31-Dec-09 Group Company Group Company

Profit attributable to equity holders of the Company 14,379,066 5,402,724 10,243,168 4,661,360Weighted average number of shares in issue (thousands) 1,734,746 1,734,746 904,985 904,985Basic earnings per share (kobo) 829 311 1,132 515


28 Net cash flows from operating activities 31-Dec-10 31-Dec-09before changes in working capital Group Company Group CompanyProfit on ordinary activities after taxation 14,374,966 5,402,724 10,096,979 4,661,361Adjustments for non-cash items and interests:- Taxation for the year 9,943,879 275,826 3,415,176 159,952- Depreciation, depletion and amortisation 6,690,009 326,957 5,770,461 274,779- Profit on sale of property plant and equipment (41,258) (35,590) (77,149) (61,852)- Revaluation surplus written off (217,242) (217,242) - -- Amortisation of software costs 162,600 149,333 158,613 149,334- Impairment loss on investments - - 1,000 3,500- Impairment loss on property, plant and equipment 1,712,210 - - -- Increase/(decrease) in provision for doubtful debts 777,773 19,160 265,486 (9,159)- Increase in provision for slow moving and obsolete stocks 46,524 5,481 207,822 -- Interest expense 5,652,290 806,108 11,746,003 4,222,749- Accretion expense 95,168 - 79,887 -- Interest received (1,468,674) (3,692,764) (3,570,953) (4,921,350)

37,728,245 3,039,993 28,093,325 4,479,31429 Net decrease in working capital

- (Increase)/Decrease in inventories (12,739,632) 31,634 6,167,707 (7,534)- Decrease/(Increase) in debtors and prepayments 15,725,275 (114,831,122) (3,305,703)(221,504,924)- (Decrease)/ Increase in creditors and accruals (20,930,574) 106,440,543 32,892,276 213,969,630- (Increase)/Decrease in long term prepayments (1,847,691) (1,847,082) (290,278) 36,988- Increase in provision for gratuity 468,837 349,302 - -- Increase in customers security deposit 19,975 - 234,350 -

(19,303,810) (9,856,725) 35,698,352 (7,505,840)

30 Directors and employees(a) Directors’ remuneration:The remuneration paid to the directors of the Company was as follows:Fees paid to non-executive directors:Chairman 2,500 2,500 1,000 1,000Others 24,793 18,000 12,600 8,100

27,293 20,500 13,600 9,100Executive directors’ salaries 443,327 187,131 369,931 173,245

470,620 207,631 383,531 182,345Other emoluments 410,074 199,995 327,811 105,721

880,694 407,626 711,342 288,066The directors received emoluments (excluding pensioncontributions) in the following ranges:

Number Number Number NumberN1,000,000 - N10,000,000 6 2 14 9Above N10,000,000 24 14 12 5

Included in the above analysis is the highest paid director atN68.5million (2009: N66.6million). 31-Dec-10 31-Dec-09

Group Company Group Company(b) Staff cost i. Employee costs during the year amounted to:Wages and salaries 5,289,674 - 3,112,162 -Welfare and training 488,961 - 441,409 -Other staff costs* 706,826 268,885 574,868 -

6,485,461 268,885 4,128,439 -* Other staff costs include provision for gratuity disclosed in Note 14.2.


N’000



ii. The average number of full-time persons employedby the Company during the year was as follows: Number Number Number Number

Executive 4 3 4 3Management staff 148 44 112 30Senior staff 417 83 358 69

569 130 474 102iii. Higher-paid employees of the Company, other thandirectors, whose duties were wholly or mainlydischarged in Nigeria, received remuneration(excluding pension contributions) in the following ranges: Number Number Number NumberN2,500,001 - N4,000,000 264 57 292 64N4,000,001 - N6,000,000 141 24 72 8N6,000,001 - N8,000,000 57 15 43 10N8,000,001 - N10,000,000 27 8 8 2Above N10,000,000 80 26 59 18

569 130 474 102


31 Capital commitment N’000 N’000 N’000 N’000Outstanding capital expenditure contracted but notprovided for in the accounts 740,838 24,663 86,196 10,304Capital expenditure approved by the Board but notyet committed 12,038,630 - 62,918,928 9,260,050

12,779,468 24,663 63,005,124 9,270,354

32 Contingent liabilities32.1 Pending litigation

There are a number of legal suits outstanding against the Company for stated amounts of N4.4 billion (2009: N1.05 billion) at the endof the year. On the advice of Counsel, the Board of Directors are of the opinion that no material losses are expected to arise.Therefore, no provision has been made in the financial statements.

32.2 GuaranteesThe Company guaranteed loans amounting to N18.33 billion (2009: N92.96 billion) from commercial banks on behalf of its subsidiaries.

32.3 Other claimsIn September 2007, the Group (through Equator Exploration Limited) transferred, under the Bilabri Settlement Agreement (‘BSA’),the full responsibility for completing the OML 122 ‘Bilabri’ development to another company, who specifically assumed responsibilityfor the project’s future funding and its historic unpaid liabilities. A contingent liability estimated at N3.2 billion might arise where thecompany failed to meet unpaid debts. No provision has been made in the financial statements.



33 Related party transactionsTransactions with affiliates within the GroupTransactions relating to the Company’s own financial statements are as follows:

31-Dec-09 31-Dec-09N’000 N’000

Oando Exploration & Production Limited 46,323,481 46,430,841Oando Energy Services Limited 33,695,083 29,205,839Oando Supply & Trading Limited (2,383,318) 26,001Oando Lekki Refinery Limited 2,401,817 2,397,329Apapa SPM Limited 552,347 483,412Oando Properties Limited 44,678 44,142Oando Gas and Power Limited (2,000,000) -Gaslink Nigeria Limited 183,847 349,009Oando Marketing PLC (11,438,411) (14,898,359)Oando Trading Bermuda Limited (8,344,492) (8,978,440)Other Companies 193,698 (12,380)

59,228,730 55,047,394

The Company provided funds to Oando Exploration and Production Limited, Oando Energy Services Limited, Apapa SPM Limited,Oando Properties Limited, and Oando Lekki Refinery Limited during the year under review. Interest costs on such funds weredirectly charged to the entities without mark-up when the funding was financed by borrowings from external parties to the Group.Interest costs were charged on intercompany borrowings. Interest income and expense arising from intercompany borrowingshave been eliminated on consolidation.

Payable to Oando Trading Bermuda relates to part funding for the consideration paid on the acquisition of Equator Exploration Limitedin 2009. In addition, payable to Oando Marketing PLC relate to sundry expenses made on behalf of the Company.

Transactions with affiliates within the Group

During the year, transactions were conducted between Oando Plc and other affiliate companies. Such transactions include:

(a). Ocean and Oil Investment received N583.4 million in respect of dividend declared at the end of 2009 (2008: N923 million).

(b). Avante Property and Assets Management Limited, a subsidiary of Ocean and Oil Holdings received N83 million (2009: N95.98million) for professional services.

(c). Avaizon Consulting, a subsidiary of Ocean and Oil Holdings, received N10.4 million (2009: N301.5 million) for consultancyservices to Oando PLC.

(d). Offshore Personnel Services Limited, a subsidiary of Ocean and Oil Holdings, received N644 million (2009: Nil) for the provisionof personnel services to Oando Energy Services Limited.

(e). Argentil Capital received N291.4 million (2009: Nil) for consultancy services to Oando PLC.

Core investorOcean and Oil Investments (Nigeria) Limited is the highest single shareholder in the Company owning 13.58% at the balance sheetdate (2009: 24.67%).

34 Technical and Management Services AgreementThe Company is a party to subsisting agreements in respect of technical know-how, marketing, management expertise, strategicplanning and consultancy services assistance. These agreements are between the Company and Ocean and Oil Holdings Limited.

The terms of the agreements include payment of Technical and Management Service fees of 4% and 3% respectively of theCompany’s net profit before taxation, where net profit before tax is under N2 billion (or 5% and 4% where net profit before tax is overN2 billion). Ocean and Oil Holdings Limited waived the Technical and Management Service fees amounting to N1.68 billion during theyear.

35 Post balance sheet eventThe Federal Government granted Oando - Agip consortium an award to develop a natural gas Central Processing Facility, for theCentral Franchise Area in the Nigerian Gas Master Plan, at the unveiling of its “Gas Revolution” on March 24, 2011.



36 Subsidiary informationEntity name Country of Nature of Investment Allotted Percentage

incorporation business Currency shares interest heldDirect ShareholdingAkute Power Limited Nigeria Power generation Naira 2,500,000 100.00%Apapa SPM Limited Nigeria Off shore submarine pipeline construction Naira 19,125,000 100.00%East Horizon Gas Co. Ltd Nigeria Gas distribution Naira 10,000,000 100.00%Equator Exploration Limited (EEL) British Virgin Islands Exploration and production USD 67,707,210 78.10%Gaslink Nigeria Limited Nigeria Gas distribution Naira 1,717,698 96.98%Oando Akepo Limited Nigeria Exploration and production Naira 2,500,000 100.00%Oando Energy Services Limited Nigeria Provision of drilling and other services to Naira 5,000,000 100.00%

upstream companiesOando Exploration & Production Ltd Nigeria Exploration and production Naira 10,000,000 100.00%Oando Gas and Power Limited Nigeria Gas and power generation and distribution Naira 1,000,000 100.00%Oando Lekki Refinery Limited Nigeria Petroleum refining Naira 2,500,000 100.00%Oando Marketing PLC Nigeria Marketing and sale of petroleum products Naira 175,000,000 100.00%Oando Port Harcourt Refinery Nigeria Petroleum refining Naira 2,500,000 100.00%Company LimitedOando Production and Development Nigeria Exploration and production Naira 10,000,000 95.00%Company LimitedOES Professionalism Limited Nigeria Provision of drilling services Naira 10,000,000 100.00%OES Passion Limited Bermuda Provision of Drilling and other services to USD 12,000 100.00%

upstream companiesOando Properties Limited Nigeria Property management services Naira 250,000 100.00%OES Respect Limited British Virgin Island Provision of drilling and other services to USD 100 100.00%

upstream companiesOES Teamwork Limited British Virgin Island Provision of drilling and other services to USD 100 100.00%

upstream companiesOando Supply and Trading Limited Nigeria Supply of crude oil and refined petroleum productsNaira 5,000,000 100.00%Oando Terminal and Logistics Nigeria Storage and haulage of petroleum products Naira 2,500,000 100.00%Oando Trading Limited (Bermuda) Bermuda Supply of crude oil and refined petroleum productsUSD 12,000 100.00%OES Integrity Limited British Virgin Island Provision of drilling and other services to USD 50,000 100.00%

upstream companiesOando Liberia Liberia Marketing and sale of petroleum products USD 50,000 100.00%

(Subsidiary of Oando Marketing PLC)Indirect ShareholdingOando Togo SA Togo Marketing and sale of petroleum products CFA 186,288,000 75.30%

(Subsidiary of Oando Marketing PLC)Oando Sierra Leone Limited Sierra Leone Marketing and sale of petroleum products Leones 10,079,000 80.00%

(Subsidiary of Oando Marketing PLC)Oando Ghana Limited Ghana Marketing and sale of petroleum products Cedi 126,575,000 82.90%

(Subsidiary of Oando Marketing PLC)UNITAB Nigeria Limited Nigeria Marketing of automobile parts Naira 40,000,000 100.00%

(Subsidiary of Oando Marketing PLC)Oando OML 125 & 134 BVI Limited British Virgin Island Exploration and production (100% owned by USD 100,987,074 100.00%

Oando Exploration and Production) Limited)Oando OML 125 & 134 Limited Nigeria Exploration and production (100% owned by Naira 2,500,000 100.00%

OML 125 & 134 BVI)Aqua Exploration Limited Bahamas Exploration and production (100% USD 100,000 78.10%

subsidiary of EEL)Equator Exploration Nigeria Limited Nigeria Exploration and production (100% Naira 10,000,000 78.10%

subsidiary of EEL)Equator Exploration (OML 122) Ltd. British Virgin Islands Exploration and production (100% USD 10,000,000 78.10%

subsidiary of EEL)Equator Exploration 321 Limited Nigeria Exploration and production (100% Naira 10,000,000 78.10%

subsidiary of EEL)Equator Exploration 323 Ltd. Nigeria Exploration and production (100% Naira 10,000,000 78.10%

subsidiary of EEL)Equator Exploration JDZ Nigeria Exploration and production (100% Naira 10,000,000 78.10%Block 2 Limited subsidiary of EEL)Equator Exploration Congo Limited Congo Exploration and production (100% CFA 148 78.10%

subsidiary of EEL)Equator Exploration Nigeria OML Nigeria Exploration and production (100% Naira 10,000,000 78.10%122 Limited subsidiary of EEL)Gaslink Ghana Limited Ghana Gas distribution (100% owned by Gaslink) Cedi 1,000,000 100.00%



Entity name Country of Nature of Investment Allotted Percentageincorporation business Currency shares interest held

Gas and Allied Services Limited Nigeria Technical and support services (100% Naira 100,000,000 51.00%owned by Gaslink)

Gas Network Services Limited Nigeria Gas distribution (subsidiary of Gaslink) Naira 5,000,000 99.90%Gas Energy Co (Edo State) Nigeria Development of Gas Pipeline (subsidiary Naira 100,000,000 67.20%

of Gaslink)Gaslink Togo SA Togo Gas distribution (100% owned by Gaslink) CFA 10,000,000 100.00%Transgas Limited Nigeria Gas distribution (100% owned by Gaslink) Naira 155,000,000 100.00%Gaslink Benin Limited Benin Gas distribution CFA 10,000,000 100.00%Oando Benin Limited Benin Marketing and sale of petroleum products CFA 14,832,000 100.00%

37 Upstream activities37.1 Details of upstream assets

N’000Mineral rights Land and Expl. costs and Capital Moveable Abandonment Total

acquisition building construction producing wells assets assetsCostAs at 1 January 16,549,915 23,750 46,146,845 7,427,149 265,619 957,860 71,371,138Transfers/reclassification - - - 299,663 - - 299,663Additions 5,946,987 - 3,004,444 508,359 178,625 2,447,133 12,085,548Impairment (Note 37.2) - - (1,399,431) - - - (1,399,431)Exchange differences 1,319,776 - - (81,511) - - 1,238,266As at 31 December 23,816,678 23,750 47,751,858 8,153,661 444,244 3,404,993 83,595,184

Depreciation / AmortisationAs at 1 January 2,193,418 56 2,875,756 1,952,679 65,235 131,737 7,218,881Transfers/reclassification (9,275) - - - - - (9,275)Charge for the period (Note 25) 168,575 - 1,271,514 925,286 21,933 138,221 2,525,529Exchange differences 943,432 - - - - - 943,432As at 31 December 3,296,150 56 4,147,270 2,877,965 87,168 269,958 10,678,567Net Book ValueAs at 31 December 2010 20,520,528 23,694 43,604,588 5,275,696 357,076 3,135,035 72,916,617

As at 31 December 2009 14,356,497 23,694 43,271,089 5,474,470 200,384 826,123 64,152,257

37.2 ImpairmentThe N1.39 billion represents impairment of the drilling and evaluation costs relating to JDZ Block 2 (of Equator Exploration Limited)following the sub-commercial discovery of the Bomu exploratory well.

Supplementary data, including the standardised measure of oil and gas activities are presented in line with Statement of AccountingStandard No. 14 in the relevant subsidiaries’ financial statements.



37.3 Details of concessionsSubsidiary License Operator Nature Location License Expiration Status

DateOando OML 125 & 134 Ltd OML 125 NAE 15% working interest Offshore PSC 04/07/2023 Producing

in OML 125 & 134Oando OML 125 & 134 Ltd OML 134 NAE 15% working interest in Offshore PSC 04/07/2023 Appraisal

OML 125 & 134Oando Petroleum Development Company Ltd OML 56 Energia 45% participatory Onshore JV 31/01/2023 Producing

interestOando Exploration And Production Ltd OPL 236 OEPL 95% working interest Onshore PSC 31/03/2013 Development/

AppraisalOando Exploration And Production Ltd OPL 278 OEPL 60% working interest Onshore PSC 31/01/2011 ExplorationOando Akepo Limited OML 90 Sogenal 30% participatory Offshore JV 31/03/2009 Development

interestOPL 282 Limited OPL 282 NAOC 4% working interest Onshore PSC 31/08/2011 ExplorationEquator Exploration JDZ Block 2 Limited JDZ Block 2 Sinopec 9% non operator Offshore PSC 13/03/2034 Appraisal/

participating interest ExplorationEquator Exploration (OML 122) Limited OML 122 Peak Finance & service Offshore PSC 13/09/2021 Development

agreement with operator / Appraisal Exploration Nigeria 323 Limited OPL 323 KNOC 30% non operator Offshore PSC 10/03/2006 Exploration

participating interestEquator Exploration Nigeria 321 Limited OPL 321 KNOC 30% non operator Offshore PSC 10/03/2006 Exploration

participating interestAqua Exploration Limited Allocation - Allocation letter with Offshore PSC - Exploration

letter for rights to enter intoBlock 5 a PSC

Aqua Exploration Limited Allocation - Allocation letter with Offshore PSC - Explorationletter for rights to enter intoBlock 12 a PSC

38 Reclassification of prior year balancesCertain prior year balances have been reclassified to conform with current year presentation format.

39 Condensed financial data of consolidated entities N’000

Oando Equator Oando Oando Oando OML Oando OML Oando OandoExploration & Exploration Akepo Ltd Production & 125 & 134 BVI 125 & 134 Marketing Supply &

Production Ltd Ltd Development Ltd Ltd PLC TradingCompany Ltd

Condensed profit and loss accountTurnover - - - 1,900,121 - 17,594,323 171,092,816 96,460,220(Loss)/profit before taxation (1,787,217) (642,674) (68,519) 677,211 (229,358) 8,910,614 5,825,047 3,158,694Taxation 946,486 - 36,045 - - (5,538,316) (1,872,514) (1,019,175)(Loss)/profit after taxation (840,731) (642,674) (32,474) 677,211 (229,358) 3,372,298 3,952,533 2,139,519

Condensed financial positionNon-current assets 30,040,064 7,538,783 6,113,258 1,533,050 2,843 49,105,212 36,893,313 63,235Current assets 102,185,161 31,088 3,492,205 1,037,906 16,419,070 40,914,368 56,080,281 38,658,385Current liabilities 132,944,574 1,287,600 6,698,006 1,991,974 369,481 74,539,725 50,282,185 37,518,537Net (liabilities)/assets (719,349) 6,282,271 (65,943) 395,051 16,052,432 8,611,096 36,793,803 1,184,333

Condensed cash flowsNet cash generated from/(used in)operating activities 896,680 (138,412) (1,598,132) 395,187 (297) 12,453,789 6,128,945 13,179,420Net cash generated from/(used in)investing activities (2,305,157) (124,437) (1,325,794) (391,790) - (7,909,244) 340,184 (24,196)Net cash generated from/(used in)financing activities - (2,081) 2,973,400 - - (4,083,222) 5,900,897 (3,310,382)Cash and cash equivalents atend of the year 344,208 19,327 53,257 11,274 - 3,333,181 2,346,462 (2,954,871)



Condensed financial data of consolidated entities (continued)Oando Trading East Horizon Akute Power Oando Gas & Oando Energy OES Integrity OES Passion OES

Bermuda Gas Company Limited Power Ltd Services Ltd Ltd Ltd ProfessionalismLtd

Condensed profit and loss accountTurnover 212,849,255 - 2,058,378 - 14,303,580 1,230,177 - -Profit/(loss) before taxation 2,655,334 (29,848) 40,410 (2,940) 2,979,172 (2,646,964) - -Taxation - 8,954 - 882 (801,642) (73,811) - -Profit/(loss) after taxation 2,655,334 (20,894) 40,410 (2,058) 2,177,530 (2,720,774) - -

Condensed financial positionNon-current assets 7,992 19,156,374 3,639,094 24,515 22,801,999 13,302,923 - -Current assets 47,995,227 227,412 1,155,434 2,001,886 17,731,016 6,302,559 1,752 10,000Current liabilities 36,405,752 6,730,853 1,906,225 2,082,604 38,759,136 23,305,360 - -Net assets/(liabilities) 11,597,467 (130,368) (151,972) (56,202) 1,346,646 (3,699,878) 1,752 10,000

Condensed cash flowsNet cash generated from/(used in) operating activities (10,965,899) 3,219,660 564,956 (2,000,100) 25,115,483 2,586,709 (1,752) (10,000)Net cash generated from/(used in)investing activities - (2,423,888) (310,698) - (23,218,815) (29,437) - -Net cash generated from/(used in)financing activities 11,574,108 (716,002) (40,026) 2,000,000 (2,038,161) (2,557,273) - -Cash and cash equivalents atend of the year 557,364 156,301 214,488 886 (1,396,796) - - -

Oando Liberia Oando Oando Port UNITAB Apapa Oando Oando GaslinkLimited Terminals Harcourt Nigeria SPM Properties Lekki Nigeria

& Logistics Refinery Limited Limited Limited Refinery LimitedCompany Limited

Limited

Condensed profit and loss accountTurnover 23,263 - - - - - - 15,387,751Profit/(loss) before taxation 5,635 - - - (1,626) (536) (988) 4,221,706Taxation 0 - - - - - - (1,354,964)Profit/(loss) after taxation 5,635 - - - (1,626) (536) (988) 2,866,742

Condensed financial positionNon-current assets 949 208,370 - - 567,096 58,053 2,278,609 3,952,027Current assets 64,793 2,500 2,500 - 19,125 250 2,498 17,672,396Current liabilities 116,476 208,370 - 53,440 571,472 58,588 2,404,317 11,843,030Net (liabilities)/assets (50,734) 2,500 2,500 (53,440) 14,749 (285) (123,210) 6,308,559

Condensed cash flowsNet cash generated from/(used in)operating activities 50,448 208,370 - 1,326 67,309 - 6,000 715,586Net cash generated from/(used in)investing activities - (208,370) - - (67,309) - (6,000) 979,446Net cash generated from/(used in)financing activities - - - (1,326) - - - (2,116,712)Cash and cash equivalents at end ofthe year 50,448 - - - - - - 2,691,599


N’000


31-Dec-10 31-Dec-09Group Company Group CompanyN’000 % N’000 % N’000 % N’000 %

Turnover 378,925,430 4,352,005 336,859,677 4,207,854Interest received 1,468,674 3,692,764 11,713,165 1,381,757Other operating income 4,174,589 322,420 3,570,953 4,921,350

384,568,693 8,367,189 352,143,795 10,510,961Bought-in materials and services- Local purchases (247,396,066) 1,428,563 (132,217,250) 1,502,245- Foreign purchases (91,215,601) - (175,858,849) -Value added 45,957,026 100 9,795,752 100 44,067,696 100 12,013,206 100

Distributed as follows:Employees:- To pay salaries, wagesand other staff costs 6,485,461 14 268,885 3 4,128,438 9 - -

Government:- To pay tax 10,013,889 22 634,628 6 5,587,087 13 159,952 1

Providers of capital:- To pay dividend 2,715,253 5 2,715,253 28 2,713,139 6 2,713,139 23- To pay interest on borrowings 5,747,458 13 806,108 8 11,825,890 27 4,222,749 35Minority interests (4,100) - - - (146,189) - - -

Maintenance and expansionof assets:- Deferred tax (70,010) - (358,803) (3) 3,945,702 9 (18,774) -- Depreciation 6,690,009 15 326,957 3 5,770,461 13 274,779 2- Retained in the business 14,379,066 31 5,402,724 55 10,243,168 23 4,661,361 39Value distributed 45,957,026 100 9,795,752 100 44,067,696 100 12,013,206 100

Statement of value addedFor the year ended


Group 2010 2009 2008 2007 2006

Balance SheetProperty plant and equipment 152,513,387 131,713,072 89,903,189 40,318,614 14,396,003Intangible assets 23,806,605 23,969,748 22,350,513 22,464,771 14,514,551Long term Investments 1,000 1,000 2,000 10,000 10,000Deferred tax assets 3,695,549 2,161,298 1,044,162 - -Long term receivable 25,492,756 18,783,390 14,544,777 11,138,446 4,612,042Net current liabilities (17,206,867) (87,040,082) (31,450,625) (6,601,994) (5,707,925)Borrowings and other non-current liabilities (77,537,617) (22,415,936) (42,795,571) (18,457,205) (2,257,844)Deferred taxation (12,424,655) (11,928,511) (7,482,795) (889,405) (687,224)Provision for other liabilities and charges (3,147,892) (2,432,237) (1,236,917) (566,950) (510,333)

95,192,266 52,811,742 44,878,733 47,416,277 24,369,270

Share capital 905,084 452,542 452,442 377,035 286,150Share premium 49,042,111 29,735,182 29,716,870 29,877,741 15,980,263Revaluation reserve 18,120,080 7,215,257 7,215,257 10,652,936 2,423,923Retained earnings 26,022,475 14,401,178 7,343,127 6,321,140 3,853,399Minority interest 1,102,516 1,007,583 151,037 187,425 1,825,535

95,192,266 52,811,742 44,878,733 47,416,277 24,369,270Profit and loss accountTurnover 378,925,430 336,859,678 339,420,435 185,892,083 209,078,938Profit before taxation 24,318,845 13,512,155 10,742,611 6,813,728 3,794,091Taxation (9,943,879) (3,415,176) (2,399,286) (1,333,313) (719,023)Profit after taxation 14,374,966 10,096,979 8,343,325 5,480,415 3,075,068Dividend* 2,715,253 2,713,139 7,242,056 2,289,203 1,430,752

Per share dataWeighted average number of shares 1,734,746 904,985 904,885 632,891 572,301Basic earnings per share (kobo) 829 1,132 922 751 411Dividends per share (kobo) 300 300 600 362 250Net assets per share (kobo) 5,258 5,835 4,960 7,492 4,258Dividend cover 2.65 times 3.71 times 1.54 times 2.08 times 1.65 times

* Dividends are disclosed in the years in which they are declared at the Annual General Meeting.

Five-Year Financial Summary (2006 - 2010)

N’000


Company 2010 2009 2008 2007 2006

Balance SheetProperty plant and equipment 10,581,664 8,910,979 1,539,035 26,039,055 13,788,755Intangible assets 298,667 448,000 597,334 9,699,814 13,445,903Long term Investments 41,340,432 39,471,680 32,131,055 16,844,848 2,080,320Deferred tax assets 166,895 244,050 - - -Long term receivable 1,854,462 7,380 44,369 318,391 326,654Net current assets/(liabilities) 55,448,094 (13,562,769) 25,199,816 1,827,053 (5,323,998)Borrowings and other non-current liabilities (51,000,000) - (25,382,404) (9,024,571) (1,403,261)Deferred taxation (192,425) (311,885) (910,683) (849,344) (662,199)Retirement benefit obligations (476,893) (127,591) - (141,671) (138,254)

58,020,896 35,079,844 33,218,522 44,713,575 22,113,920Share capital 905,084 452,542 452,442 377,035 286,150Share premium 49,042,111 29,735,182 29,716,870 29,877,741 15,980,263Revaluation reserve 1,013,047 217,242 217,243 10,652,936 2,423,923Retained earnings 7,060,654 4,674,878 2,831,967 3,805,863 3,423,584

58,020,896 35,079,844 33,218,522 44,713,575 22,113,920Profit and loss accountTurnover 4,352,005 4,207,854 6,837,741 131,007,169 132,397,373Profit before taxation 5,678,550 4,821,312 6,511,666 3,717,196 2,855,591Taxation (275,826) (159,952) (168,099) (1,045,714) (501,914)Profit after taxation 5,402,724 4,661,360 6,343,567 2,671,482 2,353,677Dividend* 2,715,253 2,713,139 7,242,056 2,289,203 1,430,752

Per share dataWeighted average number of shares 1,734,746 904,985 904,885 632,891 572,301Basic earnings per share (kobo) 829 515 701 422 411Dividends per share (kobo) 300 300 800 400 250Net assets per share (kobo) 3,345 3,888 2,671 7,065 3,864Dividend cover 2.76 times 1.72 times 0.88 times 1.06 times 1.65 times

* Dividends are disclosed in the years in which they are declared at the Annual General Meeting.

Five-Year Financial Summary(2006 - 2010)

N’000


STATEMENT OF UNCLAIMED / RETURNED DIVIDEND WARRANTS AS AT 31/12/2010

PAYMENT NO BAL.AS AT 31ST DECEMBER, 2010 PAYABLE DATE8 2,863,169.02 DECEMBER 16, 19989 4,905,972.00 MARCH 6, 200010 7,147,322.42 SEPTEMBER 14, 200011 22,607,597.11 JUNE 21, 200112 18,355,593.20 JULY 31, 200213 34,202,444.42 JUNE 25, 200414 74,416,964.40 JUNE 28, 200515 90,487,884.12 JUNE 05, 200616 279,619,131.44 JUNE 29, 200717 447,463,031.41 MAY 30, 200818 349,383,994.72 SEPTEMBER 30, 200819 45,297,136.92 AUGUST 3, 2009

TOTAL 1,376,750,241.18


STATEMENT OF UNCLAIMED / RETURNED DIVIDEND WARRANTS AS AT 31/12/2010

EX-AGIP PLC PRE MERGER ACCOUNTSTATEMENT OF UNCLAIMED / RETURNED DIVIDEND WARRANTS

PAYMENT NO BAL.AS AT 31ST DECEMBER, 2010 PAYABLE DATE20 937,520.46 MAY 5, 199821 1,726,427.48 APRIL 26,199922 4,790,589.64 MAY 3, 200023 3,210,417.09 OCTOBER 30, 200024 12,873,299.91 APRIL 25, 200125 4,555,976.68 SEPTEMBER 25, 200126 13,477,982.88 APRIL 30, 2002TOTAL 42,702,569.72

Year Authorised (N) Issued & Fully Paid-up (N) ConsiderationDate Increase Cumulative Increase Cumulative Cash/Bonus1969 0 4,000,000 0 4,000,000 Cash1978 3,000,000 7,000,000 2,100,000 6,100,000 Cash1987 43,000,000 50,000,000 33,900,000 40,000,000 Cash1991 10,000,000 60,000,000 0 40,000,000 -1993 40,000,000 100,000,000 10,000,000 50,000,000 Bonus1995 0 100,000,000 12,500,000 62,500,000 Cash1998 0 100,000,000 15,625,000 78,125,000 Bonus2001 50,000,000 150,000,000 0 78,125,000 -2002 150,000,000 300,000,000 70,129,233 148,254,233 Bonus, Loan stock

conversion and Agipshare exchange

2003 0 300,000,000 14,825,423 163,079,656 Bonus2004 0 300,000,000 40,769,914 203,849,570 Bonus2005 0 300,000,000 82,300,879 286,150,449 Cash2005 100,000,000 400,000,000 0 286,150,449 -2007 100,000,000 500,000,000 90,884,813 377,035,262 Share exchange under

Scheme ofArrangement

2008 0 500,000,000 75,407,052 452,442,314 Bonus2009 0 500,000,000 100,000 452,542,314 Staff Share Scheme2009 500,000,000 1,000,000,000 0 452,542,314 -2009 1,000,000,000 3,000,000,000 0 452,542,314 -2010 0 0 0 905,084,628 Rights Issue

(1:3 ) Bonus Issue (1:2)


The 34th Annual General Meeting of Oando PLC (the “Company”) will be held at The Landmark Village Events Centre, Water Corporation Road, Off Ligali AyorindeStreet, Victoria Island, Lagos State, Nigeria on Thursday, the 30th day of June, 2011 at 10.00 a.m. (the Meeting).

I/WE* ofbeing a member/members of Oando PLC and holders of shares,

hereby appoint** or failing him/her, the Chairman of the Meeting as my/our proxy to act and vote for me/us on my/our behalf at the Meetingof the Company to be held on Thursday 30 June, 2011, which will be held for the purposes of considering and, if deemed fit, passing with or without modification,the resolutions to be proposed at the Meeting and at each adjournment of same and to vote for or against the resolutions in accordance with the followinginstructions:

NOTEA member who is unable to attend the Annual General Meeting is entitled by law to vote by proxy. The proxy form has been prepared to enable you exerciseyour right in case you cannot personally attend the Meeting.

The proxy form should not be completed if you will be attending the Meeting. If you are unable to attend the Meeting, read the following instructions carefully:Proposed resolutions For AgainstTo receive the Report of the Audit Committee;To declare the dividend of N3.00 per share recommended by the directors of the CompanyTo elect members of the Audit Committee;To re-appoint the Auditors;To authorise the directors of the Company to fix the remuneration of the AuditorsTo elect Mr. Oghogho Akpata as directorTo elect Ms. Nana Afoah Appiah-Korang as directorTo re-elect Mr. Olufemi Adeyemo as directorTo re-elect Chief Sena Anthony as directorTo re-elect HRM Oba Michael A. Gbadebo, CFR, the Alake of Egbaland as directorTo re-elect Ms. Amal Pepple, CFR as director

PROXY FORM

Resolved that the fees payable to the Non Executive directors of the Company remains N2,500,000.00 per annum for the Chairman andN2,000,000.00 each per annum for all other Non Executive directors with effect from 1st January 2011, payable quarterly in arrears –after non-executive directors.

“Resolved on the recommendation of the Directors and in accordance with Article 141 of the Company a sum of N226,271,157 out of thebalance standing to the credit of General Reserve as at the year ended 31st December 2010 be capitalized and that the Directors beand are hereby authorized to appropriate the said capitalized sum of N226,271,157 to the members holding the shares of the companyat the close of business on 29, April 2011 in the proportion of 1 ordinary share of 50kobo for every 4 ordinary Shares of 50k each heldby them on that day on condition that the new capitalised sum of N226,271,157 be not paid in cash to members holding Ordinary Sharesbut applied on their behalf in paying up in full at par N452,542,314 shares of 50k each now issued to be allotted, distributed and creditedas fully paid up to the said members in the proportions aforesaid.”

Resolved on the recommendation of the Directors and Pursuant to Article 7 of the Company's Articles of Association, the Shareholdershereby authorise the Directors to;

(A) issue up to 25% of the unissued capital of the Company (the “Shares”) by way of a private placement or any other method on termsand conditions determined by the directors for the purposes of corporate restructuring, Mergers & Acquisitions, settlement of debts,employees and executive compensation and any other purpose which the directors resolve to be in the best interest of the Companysubject to obtaining the approvals of relevant regulatory authorities.

(B) enter into any agreements and or execute any other documents necessary for and incidental to effecting resolution (A) above.

(C) appoint such professional and other parties and perform all such other acts and do all such other things as may be necessary forand/or incidental to effecting the above resolutions

a. Write your name in BLOCK CAPITALS on the proxy form where marked*

b. Write the name of your proxy where marked**, and ensure that the proxy form is dated and signed by you. The Common Seal must be affixed onthe proxy form if executed by a corporation.

Registered holders of certificated Oando PLC shares and holders of dematerialised Oando PLC shares in their own name who are unable to attend theMeeting and who wish to be represented at the Meeting, must complete and return the attached form of proxy in accordance with the instructionscontained in the form of proxy so as to be received by the share registrars, First Registrars Nigeria Limited at Plot 2, Abebe Village Road, Iganmu, Lagos,or Computershare Investor Services (Proprietary) Limited, 70, Marshall Street, Johannesburg, 2001, South Africa, PO Box 61051, Marshalltown, 2107,not less than 48 hours before the date of the Meeting.

Holders of Oando PLC shares in South Africa (whether certificated or dematerialised) through a nominee should timeously make the necessaryarrangements with that nominee or, if applicable, Central Securities Depository Participant (“CSDP”) or broker to enable them to attend and vote at theMeeting or to enable their votes in respect of their Oando PLC shares to be cast at the Meeting by that nominee or a proxy.

Signature: ____________________________________________ Dated this _____ day of _______________ 2011.


First Registrars Nigeria LimitedPlot 2, Abebe Village Road,Iganmu, Lagos,

or

Computershare Investor Services (Proprietary)Limited,70 Marshall Street,Johannesburg, 2001, South AfricaPO Box 61051, Marshalltown, 2107


ADMISSION CARD

34th ANNUAL GENERAL MEETING TO BE HELD ATTHE LANDMARK VILLAGE EVENTS CENTRE,

WATER CORPORATION ROAD, OFF LIGALI AYORINDE STREET, VICTORIAISLAND,

LAGOS STATE, NIGERIA

On Thursday June 30, 2011 at 10.00 a.m.

NAME OF SHAREHOLDER

_________________________________________________

SIGNATURE OF PERSON ATTENDING

_________________________________________________

NOTE:The Shareholder or his/her proxy must produce this admission card

in order to be admitted at the meeting.


Dear Shareholder,

Now, your dividend can be paid directly into your bank account andyour bonus credited to your CSCS account instantly on issue, throughan electronic channel.

Benefits• Shareholders’ bank and CSCS accounts will be credited with

declared dividend and bonus respectively within 24 hours!• Elimination of time and cost of verification of physical share

certificates with the registrar before trading bonus shares• Elimination of physical dividend warrants & bonus certificates

and attendant costs of printing and posting same• Avoid loss of dividend warrants or non receipt of bonus

certificates due to change of address• Elimination of unclaimed dividends

3 Steps to receiving your e-Dividend and/or e-Bonus:1. Fill out an e-Dividend payment Mandate & e-Bonus form (Forms

have been posted to all shareholders and can also bedownloaded from our website www.oandoplc.com). Ensure thatall required information is supplied, particularly your:a. CSCS account numberb. Clearing house numberc. Stockbrokers named. Bank account number ande. Bank sort code number.

2. Verify your account details by having your banker sign andstamp in the space marked “Authorised signature & stamp ofBankers”

3. Return completed Mandate forms to:a. Oando PLC Head Office @ Ground Floor reception, 2,

Ajose-Adeogun Street, Victoria Island, Lagosb. First Registrars Nigeria Limited Head office @ Plot 2,

Abebe Village Road, Iganmu, Lagosc. All First Registrars Liaison Offices Nationwide –

Abuja, Kano, Kaduna Ibadan, Port Harcourt, Enugu

Unclaimed DividendsShareholders with outstanding dividend payments can also

have their bank accounts credited immediately by followingbelow instructions:

- Complete your e-dividend form as outlined in the steps 1- 3 above

- Attach a letter of authorisation addressed to the Registrarmandating payment of outstanding dividends to the bank

Collect yourOando Dividend andBonus instantlywith ease

account stated on your completed e-dividend form- Attach stale dividend warrants (where available)- Submit your e-dividend form along with the authorisation

letter at any of the locations stated above.

SignedOredeji Delano (Mrs.)Company secretary


e-DIVIDEND PAYMENT MANDATE, e-BONUS, e-REPORT INFORMATION & CHANGE OF ADDRESS FORM

I. PERSONAL DETAILS, 2. e-BONUS & 3. e-REPORT INFORMATION

Shareholder’s name(s)_________________________________________________________________________________________________________________(Surname/Company name) (Other names)

Full Name(s) of any other holder* __________________________________________________________________________________________________________(*Including Deceased if applicable)

Shareholders Certificate No(Where available) CSCS A/c No_________________________________(Where available)

Stockbroker’s Name ____________________________________________Clearing House No (CHN)____________________________________________________

No of units held: __________________ Date of Birth/Incorporation of Company: _____________________________________________________________

Address (As it appears in the Register of Shareholders): ______________________________________________________________________________________

_________________________________________________________________________________________________________________________________________

_________________________________________________________________________________________________________________________________________

Mobile (GSM) Number(s):____________________________________________________Other Nos.___________________________________________________

Email Address: ________________________________________________________ Fax ____________________________________________________________

4 BANK MANDATEAgreement and Acknowledgment

i . I/We hereby agree that this mandate form is an acceptance and acknowledgment of the receipt of our dividend payment in Cash from OandoPlc and an authorization to Oando Plc to act under item (iii) below.

i i . I/We hereby agree that Oando Plc may act and rely on these instructions until Oando Plc receives written notification from me/us of therevocation or modification of these instructions.

i i i . I/We hereby authorize Oando Plc to credit or cause to be credited all dividend payments due to me/us into my/our Bank Account as detailedbelow, with effect from the date hereof

Bank: ________________________________________________ Branch _______________________________________________________________________

Shareholder’s Bank Account No:

Dated this _________ day of _____________________________20______

____________________________ _______________________________Shareholders Signature Shareholders Signature**

Authorised Signature & Stamp of Bankers** In the case of corporate shareholder, please use company seal/stamp

5. CHANGE OF ADDRESS I/We hereby request that all correspondences relating to my/our holdings be sent to the address below:

New Address: ________________________________________________________________________________________________________________________

_________________________________________________________________________________________________________________________________________

_________________________________________________________________________________________________________________________________________

Date:_________________DD___________/______MM_______/_________YYYY

Completed forms should be returned to:• The Registrar, First Registrars Nigeria limited, Plot 2, Abebe Village Road, Iganmu, Lagos• First Registrars Zonal Offices in Abuja, Enugu, Ibadan, Kaduna, Kano and PortHarcourt• Oando Plc Head Office, Ground Floor Reception, 2, Ajose Adeogun Street, Victoria Island, Lagos

RC:6474


HEAD OFFICE(5th, 7th-10th Floor)2, Ajose Adeogun Street , Victoria IslandLagos, NigeriaTel: 234-1-2702400;E-mail: [email protected]: www.oandoplc.com

SA Office AddressMettle House32 Fricker RoadIllovoJohannesburgSouth Africa .Tel: 011 268 6235

GROUP LIAISON OFFICEOando LtdFirst Floor50 Curzon StreetW1J 7UWLondonTel: 44-207-297-4280-7Fax: 44-207-499-5375

OANDO MARKETING(8th Floor)2, Ajose Adeogun Street , Victoria IslandLagos, NigeriaTel: 234-1-2601290-9; 2702400E-mail: [email protected]: www.oandoplc.com

ABUJA AREA OFFICEPlot 252,Central Business DistrictOpp. NNPC TowersFederal Capital TerritoryAbuja, NigeriaTel: 234-9-5235458-9

OANDO TRADINGThistle House4, Burnaby Street,Hamilton HM 11BermudaTel: 441295 1443Fax: 441 295 9216

OANDO SUPPLY AND TRADING(10th Floor)2, Ajose Adeogun Street , Victoria IslandLagos, NigeriaTel: 234-1-2704400Fax: 234- 1 – 2696758

GASLINK(5th Floor)2, Ajose Adeogun Street , Victoria IslandLagos, NigeriaTel: 234-1-2702794-5Fax: 234-1-2713403E-mail: [email protected]: www.gaslink.org

OANDO GAS & POWER(5th Floor)2, Ajose Adeogun Street , Victoria IslandLagos, NigeriaTel: 234-1-2702794-5Fax: 234-1-2713403

OANDO ENERGY SERVICES(7th Floor)2, Ajose Adeogun Street , Victoria IslandLagos, NigeriaTel: 234-1-2622311-4Fax: 234-1-2622311

OANDO EXPLORATION ANDPRODUCTION(7th Floor)2, Ajose Adeogun Street , Victoria IslandLagos, NigeriaTel: 234-1-2601293-5, 4619882Fax: 234-1-2625467

WEST AFRICAN OPERATIONSOANDO BENIN REPUBLICOIBP 1093 Recette Principale CotonouTel: 299-313679

OANDO GHANAB35 Augostino Neto RoadAirport Residential AreaAccra, GhanaTel: 233-21-761196, 761520

OANDO ( TOGO ) S.A.142, Rue 42 Enface De L’HotelSakarawa AblogameLome, TogoTel: 228-227-59-46, 227-04-22

PLANTS/TERMINALSAPAPA TERMINALTerminal OfficeKayode StreetMarine BeachApapa, LagosTel: 234-1-5870218

LAGOS AVIATION TERMINALOando AviationMuritala Mohammed Local AirportOpposite Aero contractorsIkeja, LagosNigeriaTel: 234-1-4975888

ABUJA AVIATION TERMINALOando AviationBehind Julius Berger YardNnamdi Azikwe International AirportAbuja

BITUMEN PLANTC/O Oando Div. OfficeReclamation RoadPort HarcourtRivers StateNigeriaTel: 234-84-234516

LUBRICANT BLENDING PLANTRido VillageOff Kachia RoadPMB 2110Kaduna StateNigeriaTel: 234-62-516128, 236282

ONNE TANK TERMINALOnne Terminal, Oando PlcOnne-NPA (flt) RoadOnne Oil and Gas Free ZonePort Harcourt, NigeriaTel: 234-84-579940

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